Higher Education Amendments of 1986
PL 99-498 (S.1965), enacted 10/17/1986

100 STAT. 1268 
PUBLIC LAW 99-498—OCT. 17, 1986 
Public Law 99-
99th Congress 
•498 
Oct. 17, 1986 
[S. 1965] 
Higher 
Education 
Amendments of 
1986. 
20 u s e 1001 
note. 
An Act 
To reauthorize and revise the Higher Education Act of 1965, and for other purposes. 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; REFERENCES; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the "Higher Education 
Amendments of 1986". 
(b) REFERENCES.—References in this Act (except as otherwise pro-
vided) to "the Act" are to the Higher Education Act of 1965. 
(c) TABLE OF CONTENTS.— 
Sec. 1. Short title; references; table of contents. 
Sec. 2. Effective date. 
Sec. 3. Contracting authority subject to appropriations. 
TITLE I—AMENDMENT TO TITLE I OF THE ACT 
Sec. 101. Revision of title I. 
"TITLE I—POSTSECONDARY PROGRAMS FOR 
NONTRADITIONAL STUDENTS 
"Sec. 101. Findings. 
"Sec. 102. Definitions. 
"Sec. 103. Limitation on contract authority. 
"PART A—PROGRAM AND PLANNING GRANTS 
"Sec. 111. Institutional development. 
"Sec. 112. Establishment of off-campus program grants. 
"Sec. 113. Adult and continuing education staff development. 
"Sec. 114. Administration of programs by the Secretary. 
"Sec. 115. Authorization of appropriations. 
"PART B—NATIONAL PROGRAMS 
"Sec. 121. Adult learning research. 
"Sec. 122. Authorization limitation. 
"PART C—THE NATIONAL ADVISORY COUNCIL ON 
CONTINUING EDUCATION 
"Sec. 131. National Advisory Council on Continuing Education.". 
TITLE II—LIBRARIES 
Sec. 201. Purpose; authorization. 
Sec. 202. College library resources. 
Sec. 203. Definition of full-time equivalent student. 
Sec. 204. Repeal of special purpose grants. 
Sec. 205. Research and demonstration. 
Sec. 206. Strengthening research library resources. 
Sec. 207. College library technology and cooperation. 
TITLE III—INSTITUTIONAL AID 
Sec. 301. Institutional aid reauthorized. 
"TITLE III—INSTITUTIONAL AID 
"Sec. 301. Findings and purposes. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1269 
"PART A—STRENGTHENING INSTITUTIONS 
"Sec. 311. Program purpose. 
"Sec. 312. Definitions; eligibility. 
"Sec. 313. Duration of grant. 
"PART B—STRENGTHENING HISTORICALLY BLACK 
COLLEGES AND UNIVERSITIES 
"Sec. 321. Findings and purposes. 
"Sec. 322. Definitions. 
"Sec. 323. Grants to institutions. 
"Sec. 324. Allotments to institutions. 
"Sec. 325. Applications. 
"Sec. 326. Professional or graduate institutions. 
"Sec. 327. Reporting and audit requirements. 
"PART C—CHALLENGE GRANTS FOR INSTITUTIONS 
EUGIBLE FOR ASSISTANCE UNDER PART A 
O
R PART B 
"Sec. 331. Establishment of challenge grant program. 
"Sec. 332. Endowment challenge grants. 
"PART D—GENERAL PROVISIONS 
"Sec. 351. Applications for assistance. 
"Sec. 352. Waiver authority and reporting requirement. 
"Sec. 353. Application review process. 
"Sec. 354. Cooperative arrangements. 
"Sec. 355. Special payments rules. 
"Sec. 356. Assistance to institutions under other programs. 
"Sec. 357. Limitations. 
"Sec. 358. Penalties. 
"Sec. 359. Challenge grant application required. 
"Sec. 360. Authorizations of appropriations.". 
TITLE IV-STUDENT ASSISTANCE 
Sec. 401. Students grants reauthorized. 
"TITLE IV—STUDENT ASSISTANCE 
"PART A—GRANTS TO STUDENTS IN ATTENDANCE AT 
INSTITUTIONS OP HIGHER EDUCATION 
"Sec. 401. Statement of purpose; program authorization. 
"SUBPART 1—BASIC EDUCATIONAL OPPORTUNITY GRANTS 
"Sec. 411. Basic educational opportunity grants: amount and determinations; 
applications. 
"Sec. 411 
A. Family contribution schedule for Pell Grants; data elements. 
"Sec. 41 IB. Eligibility determination for dependent students. 
"Sec. 41IC. Eligibility determination for independent students with dependents 
other than a spouse. 
"Sec. 41 ID. Eligibility determination for single independent students or for 
married independent students without other dependents. 
"Sec. 411E. Regulations; updated tables. 
"Sec. 41 IF. Definitions; determinations. 
"SUBPART 2—SUPPLEMENTAL EDUCATIONAL OPPORTUNITY 
GRANTS 
"Sec. 413A. Purpose; appropriations authorized. 
"Sec. 413B. Amount and duration of grants. 
"Sec. 413C. Agreements with institutions; selection of recipients. 
"Sec. 413D. Allocation of funds. 
"SUBPART 3—GRANTS TO STATES FOR STATE STUDENT 
INCENTIVES 
"Sec. 415A. Purpose; appropriations authorized. 
100 STAT. 1270 
PUBLIC LAW 99-498—OCT. 17, 1986 
"Sec. 415B. Allotment among States. 
"Sec. 415C. Applications for State student incentive grant programs. 
"Sec. 415D. Administration of State programs; judicial review. 
"Sec. 415E. Definition. 
"SUBPART 4—SPECIAL PROGRAMS FOR STUDENTS FROM 
DISADVANTAGED BACKGROUNDS 
"Sec. 417A. Program authority; authorization of appropriations. 
"Sec. 417B. Talent search. 
"Sec. 417C. Upward bound. 
"Sec. 417D. Student support services. 
"Sec. 417E. Educational opportunity centers. 
"Sec. 417F. Staff development activities. 
"SUBPART 5—SPECIAL PROGRAMS FOR STUDENTS WHOSE 
FAMILIES ARE ENGAGED IN MIGRANT AND 
SEASONAL FARMWORK 
"Sec. 418A. Maintenance and expansion of existing programs. 
"SUBPART 6—ROBERT C. BYRD HONORS SCHOLARSHIP 
i 
PROGRAM 
"Sec. 419A. Statement of purpose. 
"Sec. 419B. Definition. 
"Sec. 419C. Scholarships authorized. 
"Sec. 419D. Allocation among States. 
"Sec. 419E. Agreements. 
"Sec. 419F. Eligibility of scholars. 
"Sec. 419G. Selection of scholars. 
"Sec. 419H. Stipends and scholarship conditions. 
"Sec. 4191. Awards ceremony. 
"Sec. 419J. Construction of needs provisions. 
"Sec. 419K. Authorization of appropriations. 
"SUBPART 7—ASSISTANCE TO INSTITUTIONS OF HIGHER 
EDUCATION 
"Sec. 420. Payments to institutions of higher education. 
"Sec. 420A. Veterans education outreach program. 
"SUBPART 8—SPECIAL CHILD CARE SERVICES FOR 
DISADVANTAGED COLLEGE STUDENTS 
"Sec. 420B. Special child care services for disadvantaged college students.". 
Sec. 402. Extension of guaranteed student loan program. 
"PART B—GUARANTEED STUDENT LOAN PROGRAM 
"Sec. 421. Statement of purpose; nondiscrimination; and appropriations author-
ized. 
"Sec. 422. Advances for reserve funds of State and nonprofit private loan insur-
ance programs. 
"Sec. 423. Effects of adequate non-Federal programs. 
"Sec. 424. Scope and duration of Federal loan insurance program. 
"Sec. 425. Limitations on individual federally insured loans and on Federal loan 
insurance. 
"Sec. 426. Sources of funds. 
"Sec. 427. Eligibility of student borrowers and terms of federally insured stu-
dent loans. 
"Sec. 427A. Applicable interest rates. 
"Sec. 428. Federal payments to reduce student interest costs. 
"Sec. 428A. Supplemental loans for students. 
"Sec. 428B. Plus loans. 
"Sec. 428C. Consolidation loans. 
"Sec. 428D. Commingling of funds. 
"Sec. 428E. State garnishment law requirements. 
"Sec. 428F. Rehabilitation of defaulted loans. 
"Sec. 429. Certificate of Federal loan insurance—effective date of insurance. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1271 
"Sec. 430. Default of student under Federal loan insurance program. 
"Sec. 430A. Reports to credit bureaus and institutions of higher education. 
"Sec. 431. Insurance fund. 
"Sec. 432. Legal powers and responsibilities. 
"Sec. 433. Student loan information by eligible lenders. 
"Sec. 434. Participation by Federal credit unions in Federal, State, and private 
student loan insurance programs. 
"Sec. 435. Definitions for student loan insurance program. 
"Sec. 436. District of Columbia student loan insurance program. 
"Sec. 437. Repayment by the Secretary of loans of bankrupt, deceased, or dis-
abled borrowers. 
"Sec. 438. Special allowances. 
"Sec. 439. Student loan marketing association.". 
Sec. 403. Work study reauthorized. 
"PART C—WORK-STUDY PROGRAMS 
"Sec. 441. Purpose; appropriations authorized. 
"Sec. 442. Allocation of funds. 
"Sec. 443. Grants for work-study programs. 
"Sec. 444. Sources of matching funds. 
"Sec. 445. Flexible use of funds. 
"Sec. 446. Job location and development programs. 
"Sec. 447. Work study for community service-learning on behalf of low-income 
individuals and families.'. 
Sec. 404. Demonstration project authorized. 
"PART D—INCOME CONTINGENT DIRECT LOAN 
DEMONSTRATION PROJECT 
"Sec. 451. Statement of purpose. 
"Sec. 452. Demonstration project authorized. 
"Sec. 453. Agreements with institutions of higher education. 
"Sec. 454. Terms of loan under the pilot program. 
"Sec. 455. Feasibility study.". 
Sec. 405. Amendment to part E of the Act. 
"PART E—DIRECT LOANS TO STUDENTS IN 
INSTITUTIONS OF HIGHER EDUCATION 
"Sec. 461. Appropriations authorized. 
"Sec. 462. Allocation of funds. 
"Sec. 463. Agreements with institutions of higher education. 
"Sec. 463A. Student loan information by eligible institutions. 
"Sec. 464. Terms of loans. 
"Sec. 465. Cancellation of loans for certain public service. 
"Sec. 466. Distribution of assets from student loan funds. 
"Sec. 467. Collection of defaulted loans. 
"Sec. 468. General authority of Secretary.", 
Sec. 406. Addition of a new part F relating to need analysis for student assistance. 
"PART F—NEED ANALYSIS 
"Sec. 471. Amount of need. 
"Sec. 472. Cost of attendance. 
"Sec. 473. Family contribution. 
"Sec. 474. Data elements used in determining expected family contribution. 
"Sec. 475. Family contribution for dependent students. 
"Sec. 476. Family contribution for independent students without dependents. 
"Sec. 477. Family contribution for independent students with dependents. 
"Sec. 478. Regulations; updated tables. 
"Sec. 479. Simplified needs test. 
"Sec. 479A. Discretion of student financial aid administrators. 
"Sec. 479B. Student assistance and other Federal programs. 
"Sec. 480. Definitions.". 
Sec. 407. Revision of student assistance general provisions. 
100 STAT. 1272 
PUBLIC LAW 99-498—OCT. 17,1986 
"PART G—GENERAL PROVISIONS RELATING TO STUDENT 
ASSISTANCE PROGRAMS 
"Sec. 481. Definitions. 
"Sec. 482. Master calendar. 
"Sec. 483. Forms and regulations. 
"Sec. 484. Student eligibility. 
"Sec. 484A. Statute of limitations. 
"Sec. 485. Institutional and financial assistance information for students. 
"Sec. 485A. Combined payment plan. 
"Sec. 485B. National student loan data system. 
"Sec. 486. Training in financial aid and student support services. 
"Sec. 487. Program participation agreements. 
"Sec. 488. Transfer of allotments. 
"Sec. 489. Administrative expenses. 
"Sec. 490. Criminal penalties. 
"Sec. 491. Advisory Committee on Student Financial Assistance.". 
Sec. 408. Conforming provisions. 
TITLE V—TEACHER TRAINING AND DEVELOPMENT 
Sec. 501. Revision of title V. 
"TITLE V—EDUCATOR RECRUITMENT, RETENTION, AND DEVELOPMENT 
"Sec. 501. Statement of purpose; applicability. 
"Sec. 502. Authorization of appropriations. 
-, 
"PART A—MIDCAREER TEACHER TRAINING FOR 
NONTRADITIONAL STUDENTS 
"Sec. 511. Statement of purpose. 
"Sec. 512. Selection procedures. 
"Sec. 513. Applications. 
"Sec. 514. Amount of grants. 
"Sec. 515. Reports and information. 
"PART B—SCHOOL, COLLEGE, AND UNIVERSITY 
t >' 
PARTNERSHIPS 
"Sec. 521. Purpose. 
"Sec. 522. Partnership agreement. 
"Sec. 523. Grants. 
"Sec. 524. Application for grants. 
"Sec. 525. Community college pilot project. 
"PART C—PROFESSIONAL DEVELOPMENT AND LEADERSHIP 
PROGRAMS 
"SUBPART 1—PROFESSIONAL DEVELOPMENT RESOURCE 
CENTERS 
"Sec. 531. Program authority and purpose. 
*« 
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"Sec. 532. Geographical distribution of grants. 
"Sec. 533. Grant requirements. 
"Sec. 534. Professional development policy board. 
"Sec. 535. Submission and approval of applications. 
"SUBPART 2—LEADERSHIP IN EDUCATIONAL 
ADMINISTRATION DEVELOPMENT 
"Sec. 541. Purpose; intention; regulations. 
"Sec. 542. Allocation of appropriations. 
"Sec. 543. Technical £issistance centers. 
"Sec. 544. General criteria for contracts. 
"Sec. 545. Definitions. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1273 
"PART D—TEACHER SCHOLARSHIPS AND FELLOWSHIPS 
"SUBPART 1—CONGRESSIONAL TEACHER SCHOLARSHIP 
PROGRAMS 
"Sec. 551. Purpose. 
"Sec. 552. Allocation among States. 
"Sec. 553. Grant applications. 
"Sec. 554. Amount and duration of and relation to other assistance. 
"Sec. 555. Selection of Congressional Teacher Scholars. 
"Sec. 556. Scholarship conditions. 
"Sec. 557. Scholarship repayment provisions. 
"Sec. 558. Exceptions to repayment provisions. 
"Sec. 559. Federal administration of State programs; judicial review. 
"SUBPART 2—CHRISTA MCAUUFFE FELLOWSHIP PROGRAM 
"Sec. 561. Declaration of purpose; designation. 
"Sec. 562. Use of funds for fellowships and administration. 
"Sec. 563. Christa McAuliffe fellowships. 
"Sec. 564. Selection of Christa McAuliffe teacher fellowships. 
"Sec. 565. Evaluation of applications. 
"Sec. 566. Fellowship repayment provisions. 
"PART E—STATE TASK FORCES ON TEACHER TRAINING 
"Sec. 571. State task forces on teacher training.". 
Sec. 502. Taft Institute. 
TITLE VI—INTERNATIONAL EDUCATION PROGRAMS 
Sec. 601. Findings and purposes. 
Sec. 602. Language and area centers. 
Sec. 603. Foreign language resource centers. 
Sec. 604. Undergraduate international studies and foreign language programs. 
Sec. 605. Intensive summer language institutes. 
Sec. 606. Research; studies; annual report. 
Sec. 607. Periodicals published outside the United States. 
Sec. 608. Selection of grant recipients. 
Sec. 609. Reauthorization of part A. 
Sec. 610. Business and international education programs. 
Sec. 611. Overseas internships. 
Sec. 612. Reauthorization of part B. 
Sec. 613. Advisory Board. 
Sec. 614. Deflnitions. 
TITLE VII-CONSTRUCTION AND RENOVATION 
Sec. 701. Revision of title VII. 
"TITLE VII—CONSTRUCTION, RECONSTRUCTION, AND 
RENOVATION OF ACADEMIC FACILITIES 
"Sec. 701. Purposes. 
"Sec. 702. Appropriations authorized. 
"PART A—GRANTS FOR THE CONSTRUCTION, 
RECONSTRUCTION, AND RENOVATION OF 
UNDERGRADUATE ACADEMIC FACIUTIES 
"Sec. 711. State plan. 
"Sec. 712. Basic criteria. 
"Sec. 713. Allotment of funds. 
"PART B—GRANTS FOR CONSTRUCTION, RECONSTRUCTION, 
AND RENOVATION OF GRADUATE ACADEMIC 
FACIUTIES 
"Sec. 721. Grants. 
100 STAT. 1274 
PUBLIC LAW 99-498—OCT. 17, 1986 
"PART C—LOANS FOR CONSTRUCTION, RECONSTRUCTION, 
AND RENOVATION OF ACADEMIC FACILITIES 
"Sec. 731. Eligibility conditions, amounts, and terms. 
"Sec. 732. General provisions for loan program. 
"Sec. 733. Revolving loan and insurance fund. 
"PART D—GRANTS TO PAY INTEREST ON DEBT 
"Sec. 741. Annual interest grants. 
"PART E—COLLEGE CONSTRUCTION LOAN INSURANCE 
ASSOCIATION 
"Sec. 751. Congressional declaration of purpose; definition; incorporation. 
"Sec. 752. Criteria for guarantees and insurance. 
"Sec. 753. Process of organization. 
"Sec. 754. Operation and election of Board of Directors. 
"Sec. 755. Initial capital. 
"Sec. 756. Issue of nonvoting stock and debt to the public. 
"Sec. 757. Obligations not federally guaranteed; no Federal priority. 
"Sec. 758. Authority of Secretary to sell common stock; right of first refusal. 
"Sec. 759. Use of stock sale proceeds. 
"Sec. 760. Audits; reports to the President and the Congress. 
"PART F—HOUSING AND OTHER EDUCATIONAL 
FACIUTIES LOANS 
"Sec. 761. Federal assistance in the form of loans. 
"Sec. 762. General provisions. 
"Sec. 763. Apportionment; priorities. 
"Sec. 764. Definitions. 
"PART G—SPECIAL PROGRAMS 
"Sec. 771. Welch Hall. 
"Sec. 772. Academic Health Education Center authorized. 
"Sec. 773. Estey Hall. 
"Sec. 774. Electronic instructional network for gifted and talented students. 
"Sec. 775. Mary McLeod Bethune Memorial Fine Arts Center. 
"Sec. 776. University of Connecticut Behavioral Science Facility. 
"Sec. 777. University of Rhode Island business administration program. 
"PART H—GENERAL 
"Sec. 781. Recovery of payments. 
"Sec. 782. Definitions. 
"Sec. 783. Sales of obligations required.". 
Sec. 702. Conforming provision. 
TITLE VIII—COOPERATIVE EDUCATION 
* 
' '' '^ 
Sec. 801. Cooperative education reauthorized. 
"TITLE VIII—COOPERATIVE EDUCATION 
"Sec. 801. Appropriations authorized; reservations. 
"Sec. 802. Grants for cooperative education programs. 
"Sec. 803. Demonstration and innovation projects; training and resource cen-
ters; and research.". 
TITLE IX—GRADUATE EDUCATION 
Sec. 901. Revision of title IX. 
"TITLE IX—GRADUATE PROGRAMS 
"PART A—GRANTS TO INSTITUTIONS TO ENCOURAGE 
MINORITY PARTICIPATION IN GRADUATE 
EDUCATION 
"Sec. 901. Graduate education programs reauthorized. 
-
•
. .j . ' •• * 
-. 
"Sec. 902. Submission and contents of applications. 
"Sec. 903. Use of funds. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1275 
"PART B—PATRICIA ROBERTS HARRIS FELLOWSHIPS 
"Sec. 921. Statement of purpose; designation of awards. 
"Sec. 922. Program authorized. 
"Sec. 923. Award of fellowships. 
"PART C—JACOB K. JAVITS FELLOWS PROGRAM 
"Sec. 931. Award of national graduate fellowships. 
"Sec. 932. Allocation of fellowships. 
"Sec. 933. Stipends. 
"Sec. 934. Fellowship conditions. 
"PART D—GRADUATE ASSISTANCE IN AREAS OF 
NATIONAL NEED 
"Sec. 941. Purpose. 
"Sec. 942. Grants to academic departments and programs of institutions. 
"Sec. 943. Institutional eligibility. 
"Sec. 944. Criteria for applications. 
"Sec. 945. Awards to graduate students. 
"Sec. 946. Additional assistance for cost of education. 
"PART E—ASSISTANCE FOR TRAINING IN THE LEGAL 
PROFESSION 
"Sec. 951. Program authorized. 
"PART F—LAW SCHOOL CUNICAL EXPERIENCE PROGRAMS 
"Sec. 961. Program authorization. 
"Sec. 962. Applications. 
"PART G—AUTHORIZATION OF APPROPRIATIONS 
"Sec. 971. Amount and duration of authorization.". 
TITLE X-IMPROVEMENT OF POSTSECONDARY EDUCATION 
Sec. 1001. Fund for the improvement of postsecondary education. 
Sec. 1002. Minority science and engineering improvement programs. 
"PART B—MINORITY SCIENCE AND ENGINEERING 
IMPROVEMENT PROGRAMS 
"SUBPART 1—MINORITY SCIENCE IMPROVEMENT PROGRAM 
"Sec. 1021. Purpose; authority. 
"Sec. 1022. Grant recipient selection. 
"Sec. 1023. Use of funds. 
"Sec. 1024. Administration. 
"SUBPART 2—SCIENCE AND ENGINEERING ACCESS 
PROGRAMS 
"Sec. 1031. Minority support in science and engineering programs. 
"Sec. 1032. Special service projects program. 
"Sec. 1033. Supportable activities. 
"SUBPART 3—ADMINISTRATIVE AND GENERAL 
PROVISIONS 
"Sec. 1041. Eligibility for grants. 
"Sec. 1042. Grant application. 
"Sec. 1043. Cross program and cross agency cooperation. 
"Sec. 1044. Administrative provisions. 
"Sec. 1045. Advisory provisions. 
"Sec. 1046. Definitions. 
"Sec. 1047. Authorization of appropriations.". 
Sec. 1003. Innovative projects authorized. 
100 STAT. 1276 
PUBLIC LAW 99-498—OCT. 17, 1986 
"PART C—INNOVATIVE PROJECTS FOR COMMUNITY 
SERVICES AND STUDENT FINANCIAL 
INDEPENDENCE 
"Sec. 1061. Statement of purpose. 
"Sec. 1062. Innovative projects for community services and student financial in-
dependence. 
"Sec. 1063. Authorization of appropriations.". 
Sec. 1004. Technical amendment. 
TITLE XI—PARTNERSHIPS FOR ECONOMIC DEVELOPMENT AND URBAN 
COMMUNITY SERVICE 
Sec. 1101. Program authorized. 
"TITLE XI—PARTNERSHIPS FOR ECONOMIC DEVELOPMENT 
AND URBAN COMMUNITY SERVICE 
"PART A—PARTNERSHIPS FOR ECONOMIC DEVELOPMENT 
"Sec. 1101. Findings and purpose. 
"Sec. 1102. Use of economic development funds. 
"Sec. 1103. Requirements for economic development grant applications. 
"PART B—URBAN COMMUNITY SERVICE 
"Sec. 1111. Purpose. 
"Sec. 1112. Use of urban community service funds. 
"Sec. 1113. Contents for applications for urban community services projects. 
"PART C—GENERAL PROVISIONS 
"Sec. 1121. Administrative provisions. 
"Sec. 1122. Authorization of appropriations. 
"Sec. 1123. Definitions. 
"PART D—WAGNER INSTITUTE OF URBAN PUBUC POUCY 
"Sec. 1131. Purpose; designation. 
"Sec. 1132. Application for and use of funds. 
:-
"Sec. 1133. Authorization of appropriations.". 
^(, 
TITLE XII-GENERAL PROVISIONS 
Sec. 1201. Treatment of territories and territorial student assistance. 
Sec. 1202. Reauthorization of the National Advisory Committee on Accreditation 
and Institutional Eligibility. 
Sec. 1203. Commission to study postsecondary institutional and programmatic recog-
nition process. 
Sec. 1204. Student representation. 
Sec. 1205. Financial responsibility of foreign students. 
Sec. 1206. Disclosures of foreign gifts. 
Sec. 1207. Aggregate limit of authorization of appropriations. 
TITLE XIII—EDUCATION ADMINISTRATION 
PART A—SECRETARIAL STUDIES AND EVALUATIONS 
Sec. 1301. Satisfactory progress. 
^ 
Sec. 1302. National Endowment for International Studies. 
Sec. 1303. Data study required. 
Sec. 1304. Evaluation of continuing education. 
Sec. 1305. Study of bankruptcy treatment of students. 
Sec. 1306. Study of Pell Grant less than half-time students. 
Sec. 1307. Authorization of appropriations. 
PART B—GENERAL ACCOUNTING OFFICE REPORTS 
Sec. 1311. Study of practices of State guaranty agencies and multistate guarantors 
under the guaranteed student loan program. 
Sec. 1312. Study of use of multiple-year lines of credit. 
Sec. 1313. Study of multiple disbursement. 
r . 
Sec. 1314. Student loan consolidation. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1277 
PART C—COSTS OP POSTSECONDARY EDUCATION 
Sec. 1321. National Commission on Responsibilities for Financing Postsecondary 
Education. 
PART D—LIBRARY RESOURCES 
Sec. 1331. Study of the effectiveness of the needs criteria for the college library re-
source program authorized. 
PART E—NATIONAL ACADEMY OP SCIENCES STUDY 
Sec. 1341. Volunteers. 
PART F—FAULKNER UNIVERSITY 
Sec. 1351. Relief of liability. 
PART G—AUEN YOUTH EDUCATION OPPORTUNITY PANEL 
Sec. 1361. Denial of student assistance to certain noncitizens. 
PART H—BOSTON COLLEGE 
Sec. 1371. Debt provision. 
PART I—CARL ALBERT CONGRESSIONAL RESEARCH AND STUDIES CENTER 
Sec. 1381. Appropriation provision. 
TITLE XIV—EDUCATION RESEARCH AND STATISTICS 
Sec. 1401. Educational research and improvement. 
Sec. 1402. Center for Education Statistics. 
Sec. 1403. Use of Council staff and facilities. 
Sec. 1404. Special projects under the Secretary's discretionary funds. 
TITLE XV—AMERICAN INDIAN, ALASKA NATIVE. AND NATIVE HAWAIIAN 
CULTURE AND ART DEVELOPMENT 
Sec. 1501. Short title. 
Sec. 1502. Findings. 
Sec. 1503. Definitions. 
PART A—AMERICAN INDIANS AND ALASKAN NATIVES 
Sec. 1504. Establishment of Institute. 
Sec. 1505. Board of Trustees. 
Sec. 1506. Executive Board. 
Sec. 1507. General powers of the Board. 
Sec. 1508. President of the Institute. 
Sec. 1509. Staff of Institute. 
Sec. 1510. Functions of the Institute. 
Sec. 1511. Indian preference. 
Sec. 1512. Nonprofit and nonpolitical nature of the Institute. 
Sec. 1513. Tax status. 
Sec. 1514. Transfer of functions. 
Sec. 1515. Reports. 
Sec. 1516. Headquarters. 
Sec. 1517. Compliance with other Acts. 
Sec. 1518. Endowment program. 
PART B—NATIVE HAWAIIANS 
Sec. 1521. Program for Native Hawaiian culture and art development. 
Sec. 1522. Administrative provisions. 
PART C—AUTHORIZATION OF APPROPRIATIONS 
Sec. 1531. Authorization of appropriations. 
TITLE XVI—UNITED STATES INSTITUTE OF PEACE 
Sec. 1601. Authorizations of appropriations. 
SEC. 2. EFFECTIVE DATE. 
20 USC 1001 
Except as otherwise provided in this Act, the amendments made 
by this Act shall take effect on the date of enactment of this Act. 
100 STAT. 1278 
PUBLIC LAW 99-498—OCT. 17, 1986 
20 u s e 1146a. 
SEC. 3. CONTRACTING AUTHORITY SUBJECT TO APPROPRIATIONS. 
The authority to enter into contracts or other obligations under 
this Act (other than amendments made to part B of title IV of the 
20 use 1071. 
Act) shall be effective for any fiscal year only to such extent or in 
such amounts as are provided in appropriation Acts. 
TITLE I—AMENDMENT TO TITLE I OF THE ACT 
SEC. 101, REVISION OF TITLE I. 
>> 
Title I of the Act is amended to read as follows: 
"TITLE I—POSTSECONDARY PROGRAMS FOR 
NONTRADITIONAL STUDENTS 
"FINDINGS 
t; 
20 use 1001. 
"SEC. 101. The Congress finds that— 
"(1) the increasing incidence of relocation and dislocation of 
industries and workers, the entry and reentry of adults into the 
labor force, and the rapid rate of change in technology, the 
economy, population demographics, and social conditions, neces-
sitate significant improvement in postsecondary educational 
opportunities for adults in all stages of life; 
"(2) the majority of adults who continue their education do so 
for job-related and career-oriented reasons or to fulfill admis-
sions requirements for educational or vocational training; 
"(3) minority-group citizens comprise the fastest growing seg-
ment 
of 
the 
population 
and 
labor 
force, 
yet 
are 
underrepresented in adult education programs; 
"(4) access to postsecondary educational opportunities is lim-
ited for adults whose educational needs have been inadequately 
served, or for those whose age, sex, race, disability, national 
origin, rural isolation, or economic or personal circumstances 
(such as marital status or responsibility with regard to depend-
ent children) are barriers to such opportunities; 
"(5) enrollment of adult learners (including individuals aged 
50 and over) approaches or equals that of traditional students in 
postsecondary institutions and such enrollment patterns are 
changing the demography of postsecondary education; 
"(6) the organizational structure and administration of post-
secondary institutions often represents a significant barrier to 
matriculation for the adult learner and such institutions need 
to adapt themselves to integrate adult learners; 
"(7) the Federal Government should encourage the develop-
ment of institutional partnerships between the public and pri-
vate sectors and postsecondary institutions for the purpose of 
planning and implementing effective educational programs and 
services for the adult learner; and 
"(8) it is in the interest of the Federal Government to support 
continuing education for adults in order to reduce unemploy-
ment and underemployment, enhance job opportunities, and 
promote a well-trained, flexible, internationally competitive 
work force and an educated citizenry. 
"DEFINITIONS 
20 use 1002. 
"SEC. 102. For the purpose of this title— 
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PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1279 
"(1) the term 'continuing education' means postsecondary 
instruction and support services that are designed to meet the 
educational needs of adult learners; 
"(2) the term 'adult learner' means an individual who by 
reason of personal circumstance, age, gender, disability, minor-
ity status, income, rural isolation, economic or educational 
disadvantage, marital status, presence of dependent children, 
lack of or need for new employment skills (including skills 
needed to pursue a new career) or other significant barrier (A) is 
not a traditional student, and (B) engages in some form of 
structured postsecondary study to improve the individual's 
knowledge, information skills, or employment opportunities; 
"(3) the term 'eligible institution' means an institution of 
higher education, combinations of institutions of hi.gher edu-
cation, or consortia of any such institutions; and 
"(4) the term 'qualified entity' means a public or nonprofit 
private organization which has— 
"(A) experience in administering a program consistent 
with the requirements of this title; and 
"(B) demonstrated the ability to coordinate, manage, and 
provide technical assistance to programs that receive 
grants under this title. 
"LIMITATION ON CONTRACT AUTHORITY 
"SEC. 103. The authority to enter into contracts under this title is 20 USC 1003. 
subject to the availability of appropriations. 
"PART A—PROGRAM AND PLANNING GRANTS 
INSTITUTIONAL DEVELOPMENT 
'SEC. 111. (a) PURPOSE.—It is the purpose of this section— 
"(1) to assist eligible institutions to establish programs relat-
ing postsecondary education resources more closely to the 
continuing educational training needs of the American work 
force; 
"(2) to help strengthen the capacity of postsecondary institu-
tions to respond to the continuing education needs of adults, 
especially adults— 
"(A) dislocated by technological and economic change, 
"(B) seeking entry, reentry, or progression in the work 
force after prolonged absences due to marriage and child-
rearing; 
"(C) isolated from educational resources due to age or 
geographic location; 
"(D) seeking entry into nontraditional occupations for 
their race or sex; 
"(E) receiving aid to families with dependent children; 
"(F) who are functionally illiterate; and 
"(G) who desire to pursue a new career; and 
"(3) to support cooperative arrangements between eligible 
institutions, community-based organizations, and private and 
public sector employers that will facilitate meeting the goals of 
paragraphs (1) and (2). 
Employment 
and 
unemployment. 
20 USC 1011. 
100 STAT. 1280 
PUBLIC LAW 99-498—OCT. 17, 1986 
Contracts. 
"(b) GRANTS.—To Carry out the purpose of this section, the Sec-
retary shall make grants to, and enter into contracts with, eligible 
institutions for activities, such as— 
"(1) structuring an academic program designed to facilitate 
the attendance of working students, parents caring for depend-
ent children, and individuals seeking to reenter the educational 
system; 
"(2) making academic programs available to adult learners at 
convenient times and locations; 
"(3) the encouragement of resource sharing for innovative 
uses of technology, including telecommunications (on an inter-
state or intrastate basis) to overcome barriers to continuing 
education opportunities and to develop innovative delivery sys-
tems for education programs; 
"(4) the creation or expansion of education programs and 
curriculum, including adult literacy efforts, designed to meet 
the present and future needs of the labor market; 
"(5) the development of cooperative relationships between 
business and labor organizations, community-based organiza-
tions, and agencies which provide opportunities for continuing 
education; 
"(6) the removal of barriers posed by previous education or 
training, age, sex, race, handicap, national origin, rural isola-
tion, or economic circumstance which may place adults at a 
disadvantage in seeking continuing educational opportunities; 
"(7) educational information, including literacy information, 
student financial assistance information, and occupational 
information and counseling services designed to meet the spe-
cial needs of inadequately served adults and to assist their entry 
or reentry into continuing education and the labor force; 
"(8) training for administrators, faculty, and staff to improve 
their ability to teach and serve adult learners; and 
"(9) development of remedial instruction programs for adult 
learners to enable them to enroll in college-level educational 
programs. 
"(c) ADDITIONAL USE OF FUNDS.—(1) Funds awarded under this 
section to any eligible institution shall be used for the purposes 
under subsection (b), except that, to a limited extent as approved by 
the Secretary, such funds may also be used for program planning 
and development to carry out the purposes of this section 
including— 
"(A) making adult and continuing educational opportunities 
available at convenient times and locations, including off-
campus locations; 
"(B) evaluating the responsiveness of continuing education 
programs to the work and career-related objectives of adults; 
"(C) developing or expanding educational and occupational 
information and counseling services to meet the special needs of 
adults, including information concerning available forms of 
student financial assistance; 
"(D) training of personnel in continuing education programs 
to improve their ability to serve adult learners; 
"(E) developing or expanding high-technology delivery sys-
tems and curricula to ensure closer development and career 
transitions for adult learners; 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1281 
"(F) joint planning and implementation activities between 
institutional and private sector representatives to expand edu-
cational opportunities; 
"(G) promoting the sharing of personnel and resources be-
tween an eligible institution and an employer; 
"(H) contributing to dependent care programs for low income 
participants in adult and continuing education and the develop-
ment of dependent care programs; and 
"(I) encouraging and developing collaborative efforts between 
the institution or institutions and combinations of education 
institutions, private and public institutions, organizations, busi-
ness, and labor to develop programs responsive to current 
employment and economic conditions. 
"(2) Funds made available under this section may not be used— 
"(A) to purchase or rent facilities to be used in connection 
with the program or for general operational overhead of the 
eligible institution; or 
"(B) to pay stipends or provide direct financial assistance to 
any individual participating in the programs established under 
this section. 
"(d) APPLICATIONS FOR ASSISTANCE.—(1) Any eligible institution 
may submit an application to the Secretary at such time, in such 
form, and containing such information, as may be necessary to 
enable the Secretary to evaluate the need for assistance. The Sec-
retary shall make awards on a competitive basis. 
"(2) Each such application shall— 
"(A) provide evidence that the eligible institution has identi-
fied the educational needs of potential adult learners in the 
area served by the applicant, especially adults identified in 
subsection (a)(2); 
"(B) describe the current continuing education program of-
fered by the eligible institution (including information concern-
ing the professional competence of faculty and staff, their 
degree of participation in the continuing education program, 
and institutional resources committed to the continuing edu-
cation program) and the activities proposed to be developed or 
assisted to meet the purposes of this section; 
"(C) provide assurance that Federal funds made available 
under this section will comprise not more than 87.5 percent of 
the cost of the program in the second year, and 75 percent in the 
third year; 
"(D) describe procedures for evaluating the effectiveness of 
the activities for which a grant or contract is awarded under 
this section; 
"(E) provide for such financial controls and accounting proce-
dures as are necessary to ensure proper disbursement and 
accounting for funds made available to the applicant under this 
section and to ensure that funds made available under this 
section for any fiscal year will be used to supplement and, to the 
extent practical, increase the funds that would otherwise be 
made available for the purpose of this section and in no case 
supplant those funds; 
"(F) provide assurances that the continuing education pro-
grams, services, and activities, funded under this section will 
not be limited to individuals who are enrolled in programs of 
study that lead to baccalaureate or graduate degrees, but will 
also include programs for adults enrolled in noncredit continu-
100 STAT. 1282 
PUBLIC LAW 99-498—OCT. 17, 1986 
ing education programs, that address the purposes of this 
section; 
State and local 
"(G) provide assurances that the program funded under this 
governments. 
section does not duplicate existing State funded programs, and, 
in the case of any public institution, that the proposed program 
is consistent with the State's goals for that institution; 
"(H) provide the projected number of students who will 
participate in the program and the proposed operational budget 
for the program, including the specific amounts proposed to be 
expended for salaries; 
"(I) include assurances that the applicant intends to continue 
the activities to be supported under the grant after termination 
of the grant, including a detailed plan for obtaining funds to 
continue such activities; 
"(J) provide assurances that funds made available under this 
section will be used only for the purposes of this section; 
"(K) provide for a reasonable period of review and comment 
on the proposed program by the appropriate State agency and 
include any such comments with the application to the Sec-
retary; and 
"(L) include such other information as the Secretary may 
reasonably require to carry out the provisions of this section. 
"(3) In awarding grants or contracts the Secretary shall give 
priority consideration to eligible institutions which— 
"(A) as appropriate, include area employer and employee 
organizations in the planning of the proposed continuing edu-
cation activity and provide assurances of the continued partici-
pation of such organizations in the implementation, operation, 
and evaluation of the funded activities; 
State and local 
"(B) include assurances that the appropriate State agencies 
governments. 
concerned with postsecondary education and State labor market 
and economic agencies have been consulted in the development 
of the proposal; 
"(C) demonstrate a willingness to conduct and integrate into 
the curriculum 
work-oriented 
professional 
and 
technical 
continuing education programs; 
"(D) demonstrate the capacity to obtain contributions of staff, 
equipment, and resources for such programs from nonacademic 
sources, particularly employers; and 
"(E) provide assurances that adults enrolled in such programs 
will have access to suitable and adequate financial assistance 
opportunities, including Federal student aid funds available for 
students enrolled less than half time. 
"ESTABLISHMENT OF OFF-CAMPUS PROGRAM GRANTS 
20 use 1012. 
"SEC. 112. (a) PURPOSE; OFF-CAMPUS EDUCATION PROGRAMS.—The 
Secretary shall establish a grant program to assist postsecondary 
institutions in developing programs to encourage the establishment 
and growth of off-campus educational programs. 
"(b) USES OF FUNDS.—Grants made under this section to any 
institution may be used for planning, developing, or operating a 
program designed by the institution to carry out the purposes of this 
section including— 
"(1) the development and use of high-technology educational 
delivery systems using computers, radio, television, teleconfer-
encing, video-disc, print, any combination of such components. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1283 
or such other means as may provide direct use and access by 
individuals to off-campus programs; 
"(2) the development of interstate educational delivery sys-
tems, cooperative, and consortia arrangements and programs 
(including telecommunications) which more effectively address 
regional needs for education; 
'(3) training of faculty and staff to develop educational pro-
grams using creative and innovative delivery systems; 
"(4) development of technological systems designed to en-
hance the teaching capabilities of faculty for students off-
campus; 
"(5) the development of curricula and student support services 
for students off-campus; and 
"(6) acquisition (by lease or purchase) of necessary equipment, 
except that not more than 10 percent of such funds may be used 
for such acquisition. 
"(c) APPLICATIONS FOR ASSISTANCE.—(1) Any eligible institution 
requesting assistance under this section shall submit to the Sec-
retary an application for assistance at such time, in such form, and 
containing such information, as may be required by the Secretary. 
The Secretary shall make awards on a competitive basis taking into 
consideration the relative cost and effectiveness of the proposed 
program. 
"(2) An institution, in its application for a grant, shall— 
"(A) describe a program for establishing or improving deliv-
ery systems for students off-campus which shall include (i) the 
proposed operational budget for the program or activities to be 
conducted with funds received under the grant; (ii) the edu-
cational program or courses which would be made available off-
campus; and (iii) the educational needs which the program is 
designed to address; 
"(B) describe the applicant's current off-campus program or 
plans for an off-campus program; 
"(C) provide for such financial control and accounting proce-
dures as may be necessary to ensure proper disbursement and 
accounting for funds made available to the applicant under this 
section; 
"(D) set forth policies and procedures to ensure that Federal 
funds made available under this section for any fiscal year will 
be used to supplement and, to the extent practical, increase the 
funds that would otherwise be made available for the purposes 
of this section and in no case supplant those funds; 
"(E) provide assurances that Federal funds made available 
under this section will comprise not more than 87.5 percent of 
the cost of the program in the second year, and 75 percent in the 
third year; 
"(F) set forth policies and procedures for evaluating the 
effectiveness of the institution in accomplishing the purposes of 
the activities for which a grant is awarded under this section; 
and 
"(G) provide such other information as the Secretary may 
require. 
"(3) Funds made available under this section to any institution 
may not be used for rent or the purchase of facilities to be used in 
connection with the program, for general operational overhead of 
the institution or combination of institutions, or for salaries or 
stipends to students participating in the program. 
100 STAT. 1284 
PUBLIC LAW 99-498—OCT. 17, 1986 
"ADULT AND CONTINUING EDUCATION STAFF DEVELOPMENT 
20 use 1013. 
"SEC. 113. (a) PURPOSE.—It is the purpose of this section to assist 
eligible institutions to provide in-service training to individuals 
involved in providing adult and continuing education services, 
including personnel involved in training offered under the Adult 
20 use 1201 
Education Act, the Job Training Partnership Act, the Carl D. Per-
note. 
kins Vocational Education Act, the Rehabilitation Act of 1973, the 
note. 
National Apprenticeship Act, the Older Americans Act of 1965, and 
20 use 2301 
the Social Security Act. 
note. 
"(b) GRANTS AUTHORIZED.—To carry out the purpose of this sec-
29 use 50^" t^ 
*'^°^.' ^^® Secretary shall make grants to eligible postsecondary 
42 use 30oT 
institutions that have entered into agreements with the Secretary to 
note. 
carry out an adult and continuing education staff development 
42 use 1305. 
training program in accordance with the requirements of this sec-
tion, which may include— 
"(1) programs designed to enhance the pedagogical skills of 
the staff involved in programs offering adult and continuing 
education, including the training of staff and volunteers for 
literacy programs; 
"(2) technical assistance to programs of adult education, with 
particular emphasis on federally funded programs; and 
"(3) development of adult and continuing educational curric-
ula materials, including adult literacy curricula, that may be 
used in adult and continuing education staff development 
training, especially materials that focus on utilization of new 
technologies. 
"(c) APPLICATIONS FOR ASSISTANCE.—(1) Any eligible institution 
requesting assistance under this section shall submit to the Sec-
retary an application for assistance at such time, in such form, and 
containing such information, as may be required by the Secretary. 
The Secretary shall make awards on a competitive basis taking into 
consideration the relative cost and effectiveness of the proposed 
program. 
"(2) An institution, in its application for a grant, shall— 
"(A) describe a proposal for establishing or improving staff 
development programs including the proposed operational 
budget for the program or activities to be conducted with funds 
made available under this section; 
"(B) describe the applicant's current staff development 
program; 
"(C) provide for such financial control and accounting proce-
dures as may be necessary to ensure proper disbursement and 
accounting for funds made available to the applicant under this 
section; 
"(D) set forth policies and procedures to ensure that Federal 
funds made available under this section for any fiscal year will 
be used to supplement and, to the extent practical, increase the 
funds that would otherwise be made available for the purposes 
of this part and in no case supplant those funds; 
"(E) set forth policies and procedures for evaluating the 
effectiveness of the institution in accomplishing the purposes of 
the activities for which a grant is awarded under this section; 
and 
"(F) provide such other information as the Secretary may 
require. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1285 
"(3) Funds made available under this section to any institution 
may not be used for rent or the purchase of facilities to be used in 
connection with the program, for general operational overhead of 
the institution or combination of institutions, or for salaries or 
stipends to students participating in the program. 
"(4) A grant under this section may not exceed $50,000 for any 
fiscal year and may be awarded for a period not to exceed 3 years. 
ADMINISTRATION OF PROGRAMS BY THE SECRETARY 
"SEC. 114. The Secretary shall ensure the equitable geographic 
distribution of funds under this part. In making awards under this 
part, the Secretary shall consider the equitable levels of funding for 
urban and rural areas. Grants and contracts under section 111 or 
112 may be awarded for a period not to exceed 3 years and may not 
exceed $100,000 in the first year of funding, except that a grant or 
contract involving combinations of institutions of higher education 
or a consortia with other institutions or organizations may not 
exceed $150,000 in the first year. 
Urban areas. 
Rural areas. 
20 u s e 1014. 
AUTHORIZATION OF APPROPRIATIONS 
"SEC. 115. There is authorized to be appropriated to carry out this 
part $10,000,000 for fiscal year 1987 and such sums as may be 
necessary for each of the 4 succeeding fiscal years. One hundred 
percent of the funds appropriated under this section for fiscal year 
1987 shall be available only to carry out sections 111 and 112. 
"PART B—NATIONAL PROGRAMS 
20 u s e 1015. 
ADULT LEARNING RESEARCH 
"SEC. 121. (a) ESTABUSHMENT OF PROGRAM.—To carry out the 
purpose of this section by providing assistance to institutions of 
higher education, the Secretary is authorized to make grants to, and 
to enter into contracts with, eligible institutions to ensure a sus-
tained capacity to undertake independent research and research 
application activities in adult and continuing education. 
"(b) USES OF FUNDS.—Funds made available under this section to 
any eligible institution may be used for planning, developing, or 
operating a program which may include— 
"(1) identifying and analyzing the special problems and needs 
of adult learners; 
"(2) collecting, analyzing, and disseminating information 
relating to adult learners and their educational and employ-
ment objectives, with particular focus on analyzing and dissemi-
nating information on the current and projected needs of the 
labor market; 
"(3) examining and applying uses of education technologies to 
reach new and isolated learners; 
"(4) collecting and disseminating relevant data from Federal 
agencies and other national and State resources applicable to 
postsecondary institutional planning for continuing education, 
including information related to Federal and other forms of 
student financial assistance; 
"(5) supporting training programs designed to enhance the 
effectiveness of faculty to teach adult learners; 
Grants. 
Contracts. 
20 u s e 1016. 
State and local 
governments. 
100 STAT. 1286 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(6) developing curriculum and instructional methods for 
adults seeking new employment opportunities; 
"(7) demonstrating and disseminating new and existing pro-
grams designed for the adult learner; and 
"(8) promoting resource sharing for innovative uses of tech-
nology, including telecommunications, to overcome barriers to 
postsecondary educational opportunities. 
"(c) APPLICATION FOR ASSISTANCE.—A grant or contract authorized 
by this part may be awarded by the Secretary on a competitive basis 
upon receipt of an application, which is submitted to the Secretary 
at such time or times and contains such information as the Sec-
retary may prescribe. Each such application shall— 
"(1) contain provisions that demonstrate the existing re-
sources and academic reputation of the institution of higher 
education in the field of continuing education and its ability to 
conduct such activities; and 
"(2) provide for such fiscal control and fund accounting proce-
dures as may be necessary to assure proper disbursement of and 
accounting for Federal funds paid to the applicant under this 
part. 
"AUTHORIZATION LIMITATION 
20 use 1016a. 
"SEC. 122. No funds are authorized to be appropriated for the 
purpose of this part for fiscal year 1987 and the 4 succeeding fiscal 
years. 
"PART C—THE NATIONAL ADVISORY COUNCIL ON CONTINUING 
EDUCATION 
"NATIONAL ADVISORY COUNCIL ON CONTINUING EDUCATION 
20 use 1017. 
"SEC. 131. (a) ESTABLISHMENT AND COMPOSITION.—The President 
shall appoint a National Advisory Council on Continuing Education 
consisting of 8 representatives of Federal agencies having post-
secondary continuing education and training responsibilities, includ-
ing, but not limited to— 
"(1) one representative each from— 
"(A) the Department of Education, 
"(B) the Department of Agriculture, 
"(C) the Department of Defense, 
"(D) the Department of Labor, and 
"(E) the Veterans' Administration; and 
"(2) 12 members, not full-time employees of the Federal 
Government, who are knowledgeable and experienced in the 
field of continuing education, including State and local govern-
ment officials, representatives of business, labor, and commu-
nity groups, and adults whose educational needs have been 
inadequately served. 
The Advisory Council shall meet at the call of the Chairman but not 
less than twice a year. 
"(b) ADVISORY FUNCTIONS.—The Advisory Council shall advise the 
Secretary in the preparation of general regulations and with respect 
to policies and procedures arising in the administration of this Act 
with respect to continuing education. 
"(c) FUNCTIONS RELATING TO ELIMINATING DUPLICATION.—The Ad-
visory Council shall examine all federally supported continuing 
education and training programs and make recommendations with 
regard to policies to eliminate duplication and to effectuate the 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1287 
coordination of programs under this Act with respect to continuing 
education and other federally funded continuing education and 
training programs and services. 
"(d) REPORTS.—The Advisory Council shall make annual reports to 
the President, the Congress, and the Secretary of its findings and 
recommendations, including recommendations for changes in the 
provisions of this Act with respect to continuing education and other 
Federal laws relating to continuing education and training activi-
ties. The President shall transmit each such report to the Congress 
with his comments and recommendations. The Advisory Council 
shall make such other reports or recommendations to the President, 
the Congress, the Secretary, or the head of any other Federal 
department or agency as may be appropriate. 
(e) USE OF SERVICES.—The Advisory Council may utilize the 
services and facilities of any agency of the Federal Government as 
may be necessary. The Advisory Council may accept, employ, and 
dispose of gifts or bequests to carry out its responsibilities under this 
section.". 
TITLE II—LIBRARIES 
President of U.S. 
SEC. 201. PURPOSE; AUTHORIZATION. 
(a) DESIGNATION OF TITLE.—The heading of title II is amended to 
read as follows: 
"TITLE II—ACADEMIC LIBRARY AND INFORMATION 
TECHNOLOGY ENHANCEMENT". 
(b) PURPOSE.—Section 201(a) of the Act is amended by striking out 
paragraph (4) and inserting in lieu thereof the following: 
"(4) college and university libraries in acquiring technological 
equipment and in conducting research in information tech-
nology in accordance with part D.". 
(c) AUTHORIZATION OF APPROPRIATIONS.—Section 201(b) of the Act 
is amended to read as follows: 
"(b)(1) There are authorized to be appropriated to carry out part A 
$10,000,000 for fiscal year 1987, and such sums as may be necessary 
for each of the 4 succeeding fiscal years. 
"(2) There are authorized to be appropriated to carry out part B 
$5,000,000 for fiscal year 1987, and such sums as may be necessary 
for each of the 4 succeeding fiscal years. 
"(3) There are authorized to be appropriated to carry out part C 
$10,000,000 for fiscal year 1987, and such sums as may be necessary 
for each of the 4 succeeding fiscal years. 
"(4) There are authorized to be appropriated to carry out part D 
$5,000,000 for fiscal year 1987, and such sums as may be necessary 
for each of the 4 succeeding fiscal years.". 
SEC. 202. COLLEGE LIBRARY RESOURCES. 
Section 211 of the Act is amended to read as follows: 
"COLLEGE UBRARY RESOURCES 
"SEC. 211. (a) From the amount appropriated for this part, the 
Secretary shall make grants to eligible institutions of higher edu-
cation or combinations thereof (and to branches of institutions 
which are located in different communities from that in which its 
parent institution is located). The amount of a grant under this part 
20 use 1021. 
Post, p. 1289. 
Post, p. 1289. 
20 use 1031. 
20 u s e 1041. 
Grants. 
20 use 1029. 
100 STAT. 1288 
PUBLIC LAW 99-498—OCT. 17, 1986 
shall not be less than $2,000 nor more than $10,000 and shall reflect 
the number of full-time equivalent students enrolled at the recipient 
institution. If the funds are not sufficient to provide grants to all 
eligible institutions, grants shall be made to those institutions dem-
onstrating the greatest need, based on the eligibility criteria in 
section 211(c). 
"(b) A grant under this part may be made only if the application 
provides— 
"(1) information about the institution and its library re-
sources as prescribed by the Secretary in regulations; 
"(2) satisfactory assurance that the applicant has expended 
for all library materials (exclusive of construction) during the 
institutional fiscal year preceding the year of application for 
which the grant is sought (hereafter in this section referred to 
as the 'base year'), from funds other than funds received under 
this part, an amount not less than the average annual aggre-
gate amount or the average amount per full-time equivalent 
student it expended for such purposes during the two years 
preceding the base year; 
"(3) for such fiscal control and fund accounting procedures as 
are necessary to assure proper disbursement of and accounting 
for Federal funds paid to the applicant under this part; 
Reports. 
"(4) for making such reports as the Secretary may require, 
including a report on how such funds received under a grant 
were expended, and for keeping such records and for affording 
such access thereto as the Secretary deems necessary to assure 
the correctness and verification of such reports; and 
"(5) a statement setting forth how the funds received under 
this part will be used to improve the quality of the institution's 
library services. 
"(c) In order to be considered an eligible institution, an institution 
must provide the Secretary assurance that— 
"(1) the expenditures of the institution per full-time equivalent 
student for library materials are less than the average of the 
expenditures for library materials per full-time equivalent stu-
dent by other institutions of comparable size and program, as 
determined by the Secretary in accord with definitions estab-
lished by the Center for Education Statistics; and 
"(2) the number of volumes per full-time equivalent student is 
less than the average of such number of volumes held by 
institutions of comparable size and program, as determined by 
the Secretary in accord with definitions established by the 
Center for Education Statistics. 
"(d) If the Secretary determines, in accordance with regulations, 
that there are very unusual circumstances which prevent the ap-
plicant from making the assurance required by subsection Ot))(2), the 
requirement for such assurance may be waived. For the purpose of 
this subsection, the term 'very unusual circumstances' means theft, 
vandalism, fire, flood, earthquake, or other occurrence which may 
temporarily reduce the level of expenditures for library materials, 
or which resulted in unusually high expenditures for library 
materials. 
"(e) If the Secretary determines, in accordance with regulations, 
that there are very unusual circumstances which prevent an other-
wise eligible institution from qualifying under subsection (c), the 
requirements of subsection (c) may be waived. The Secretary may 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1289 
not grant such waivers to more than 5 percent of the eligible 
institutions receiving grants under this part. 
"(f) Grants under this part may be used only for books, periodicals, 
documents, magnetic tapes, computer software, phonographic 
records, audiovisual materials, and other related library materials 
(including necessary binding) and for the establishment and mainte-
nance of networks for sharing library resources with other institu-
tions of higher education.". 
SEC. 203. DEFINITION OF FULL-TIME EQUIVALENT STUDENT. 
Part A of title II of the Act is further amended by inserting after 
section 212 the following new sections: 
"DEFINITION 
"SEC. 213. For the purpose of this part, the term 'full-time equiva- 
20 USC 1030. 
lent students' means the sum of the number of students enrolled full 
time at an institution, plus the full-time equivalent of the number of 
students enrolled part time at such institution (determined on the 
basis of the quotient of the sum of the credit hours of all part-time 
students divided by 12).". 
SEC. 204. REPEAL OF SPECIAL PURPOSE GRANTS. 
(a) REPEAL.—Section 224 of the Act is repealed. 
20 USC 1034. 
(b) CONFORMING AMENDMENTS.—(1) Section 221 of the Act is 
amended to read as follows: 
"GRANTS AUTHORIZED 
"SEC. 221. From the amounts appropriated for this part for any 
20 USC 1031. 
fiscal year, the Secretary shall make grants in accordance with 
sections 222 and 223. Of such amount, two-thirds shall be available 
20 USC 1032, 
for the purpose of section 222 and one-third shall be available for the 
1033. 
purpose of section 223.". 
(2) Section 231(b) of the Act is amended by striking out "or 224". 20 use 1041. 
SEC. 205. RESEARCH AND DEMONSTRATION. 
Section 223 of the Act is amended by striking out "and informa- 
20 USC 1033. 
tion technology,". 
SEC. 206. STRENGTHENING RESEARCH LIBRARY RESOURCES. 
Section 231 of the Act is further amended by inserting at the end 
20 USC 1041. 
thereof the following new subsection: 
"(c) In determining eligibility for assistance under this part, the 
Secretary shall permit institutions that do not otherwise qualify to 
provide additional information or documents to demonstrate the 
national or international significance for scholarly research of the 
particular collection described in the grant proposal.". 
SEC. 207. COLLEGE LIBRARY TECHNOLOGY AND COOPERATION. 
Part D of title II of the Act is amended to read as follows: 
"PART D—COLLEGE LIBRARY TECHNOLOGY AND COOPERATION 
GRANTS 
" E S T A B U S H M E N T OF PROGRAM 
"SEC. 241. (a) The Secretary is authorized to make grants for 
20 USC 1047. 
technological equipment and other special purposes to— 
100 STAT. 1290 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(1) institutions of higher education which demonstrate a 
need for special assistance for the planning, development, ac-
quisition, installation, maintenance, or replacement of techno-
logical equipment (including computer hardware and software) 
necessary to participate in networks for sharing of library 
resources; 
"(2) combinations of higher education institutions which dem-
onstrate a need for special assistance in establishing and 
strengthening joint-use library facilities, resources, or equip-
ment; 
"(3) other public and private nonprofit organizations which 
provide library and information services to institutions of 
higher education on a formal, cooperative basis for the purpose 
of establishing, developing, or expanding programs or projects 
that improve their services to institutions of higher education; 
and 
"(4) institutions of higher education conducting research or 
demonstration projects to meet special national or regional 
needs in utilizing technology to enhance library or information 
sciences. 
"(b) From funds appropriated for this part, the Secretary shall 
make competitive awards to institutions or combinations of institu-
tions in each of the categories described in clauses (1) through (4) of 
subsection (a). The minimum award shall be $15,000 and may be 
expended over a 3-year period. 
"(c) A grant under this section may be made only if the applica-
tion (whether by an individual institution or a combination of 
institutions) is approved by the Secretary on the basis of criteria 
prescribed in regulations and provides satisfactory assurance that 
the applicant will expend during the 3-year period for which the 
grant is sought (from funds other than funds received under this 
title), for the same purpose as such grant, an amount from such 
other sources equal to not less than one-third of such grant. 
"(d) This program shall be administered in the Department by an 
expert in library technology.". 
TITLE III—INSTITUTIONAL AID 
SEC. 301. INSTITUTIONAL AID REAUTHORIZED. 
(a) AMENDMENT.—Title III of the Act is amended to read as 
follows: 
"TITLE III—INSTITUTIONAL AID 
"FINDINGS AND PURPOSES 
20 use 1051. 
"SEC. 301. (a) FINDINGS.—The Congress finds that— 
"(1) many institutions of higher education in this era of 
declining enrollments and scarce resources face problems which 
threaten their ability to survive; 
"(2) the problems relate to the management and fiscal oper-
ations of certain institutions of higher education, as well as to 
an inability to engage in long-range planning, recruitment 
activities, and development activities, including endowment 
building; 
"(3) the title III program prior to 1985 did not always meet the 
specific development needs of historically Black colleges and 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1291 
universities and other institutions with large concentrations of 
minority, low-income students; 
"(4) the solution of the problems of these institutions would 
enable them to become viable, fiscally stable and independent, 
thriving institutions of higher education; 
"(5) providing a minimum level of assistance to all categories 
of eligible institutions will assure the continued participation of 
the institutions in the program established in title III and 
enhance their role in providing access and quality education to 
low-income and minority students; 
"(6) these institutions play an important role in the American 
system of higher education, and there is a strong national 
interest in assisting them in solving their problems and in 
stabilizing their management and fiscal operations, and in be-
coming financially independent; and 
"(7) there is a particular national interest in aiding those 
institutions of higher education that have historically served 
students who have been denied access to postsecondary edu-
cation because of race or national origin and whose participa-
tion in the American system of higher education is in the 
Nation's interest so that equality of access and quality of post-
secondary education opportunities may be enhanced for all 
students. 
"(b) PURPOSE.—It is the purpose of this title to assist such institu-
tions in equalizing educational opportunity through a program of 
Federal assistance. 
"PART A—STRENGTHENING INSTITUTIONS 
"PROGRAM PURPOSE 
"SEC. 
311. (a) GENERAL AUTHORIZATION.—The Secretary shall 
20 use 1057. 
carry out a program, in accordance with this part, to improve the 
academic quality, institutional management, and fiscal stability of 
eligible institutions, in order to increase their self-sufficiency and 
strengthen their capacity to make a substantial contribution to the 
higher education resources of the Nation. 
"(b) GRANTS AWARDED; SPECIAL CONSIDERATION.—(1) From the 
sums available for this part under section 358(a)(1), the Secretary 
may award grants to any eligible institution with an application 
approved under section 351 in order to assist such an institution to 
plan, develop, or implement activities that promise to strengthen 
the institution. 
"(2) Special consideration shall be given to any eligible institu-
tion— 
"(A) which has endowment funds (other than any endowment 
fund built under section 332 of this Act as in effect on Septem-
ber 30, 1986, and under part B) the market value of which, per 
full-time equivalent student, is less than the average current 
market value of the endowment funds, per full-time equivalent 
student (other than any endowment fund built under section 
332 of this Act as in effect on September 30, 1986, and under 
part B) at similar institutions; or 
"(B) which has expenditures per full-time equivalent student 
for library materials which is less than the average of the 
expenditures for library materials per full-time equivalent stu-
dent by other similarly situated institutions. 
100 STAT. 1292 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(3) Special consideration shall be given to applications which 
propose, pursuant to the institution's plan, to engage in— 
_"(A) faculty development; 
"(B) funds and administrative management; 
"(C) development and improvement of academic programs; 
"(D) acquisition of equipment for use in strengthening funds 
management and academic programs; 
"(E) joint use of facilities such as libraries and laboratories; 
and 
"(F) student services. 
"DEFINITIONS; ELIGIBILITY 
20 use 1058. 
"SEC. 312. (a) EDUCATIONAL AND GENERAL EXPENDITURES.—For the 
purpose of this part, the term 'educational and general expendi-
tures' means the total amount expended by an institution of higher 
education for instruction, research, public service, academic support 
(including library expenditures), student services, institutional sup-
port, scholarships and fellowships, operation and maintenance 
expenditures for the physical plant, and any mandatory transfers 
which the institution is required to pay by law. 
"(b) ELIGIBLE INSTITUTION.—For the purpose of this part, the term 
'eligible institution' means— 
"(1) an institution of higher education— 
"(A) which has an enrollment of needy students as re-
quired by subsection (c) of this section; 
"(B) except as provided in section 352(b), the average 
educational and general expenditures of which are low, per 
full-time equivalent undergraduate student, in comparison 
with the average educational and general expenditures per 
full-time equivalent undergraduate student of institutions 
that offer similar instruction; 
"(C)(i) is legally authorized to provide, and provides 
within the State, an educational program for which it 
awards a bachelor's degree, or (ii) is a junior or community 
college; 
"(D) is accredited by a nationally recognized accrediting 
agency or association determined by the Secretary to be 
reliable authority as to the quality of training offered or is, 
according to such an agency or association, making reason-
able progress toward accreditation; 
"(E) except as provided in section 352(b) has, during the 5 
academic years preceding the academic year for which it 
seeks assistance under this part— 
"(i) met the requirement of either subparagraph (C)(i) 
or (C)(ii), or of both such subparagraphs (simulta-
neously or consecutively); and 
"(ii) met the requirement of subparagraph (D); and 
"(F) meets such other requirements as the Secretary may 
prescribe; 
"(2) any branch of any institution of higher education 
described under paragraph (1) which by itself satisfies the 
requirements contained in subparagraphs (A) and (B) of such 
paragraph; 
"(3) any institution of higher education which has an enroll-
ment of which at least 20 percent are Mexican American, 
Puerto Rican, Cuban, or other Hispanic students, or combina-
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1293 
tion thereof, and which also satisfies the requirements of sub-
paragraphs (A) and (B) of paragraph (1); 
"(4) any institution of higher education which has an enroll-
ment of at least 60 percent American Indian, or in the case of 
Alaska natives, an enrollment of at least 5 percent, and which 
also satisfies the requirements of subparagraphs (A), (B), (C), 
and (D) of paragraph (1); and 
"(5) any institution of higher education which has an enroll-
ment of which at least 5 percent are Native Hawaiian, Asian 
American, 
American 
Samoan, 
Micronesian, 
Guamian 
(Chamorro), and Northern Marianian, or any combination 
thereof, and which also satisfies the requirements of subpara-
graphs (A) and (B) of paragraph (1). 
For purposes of the determination of whether an institution is an 
eligible institution under this paragraph, the factor described under 
paragraph (1)(A) shall be given twice the weight of the factor 
described under paragraph (1)(B). 
"(c) ENROLLMENT OF NEEDY STUDENTS.—For the purpose of this 
part, the term 'enrollment of needy students' means an enrollment 
at an institution of higher education or a junior or community 
college which includes— 
"(1) at least 50 percent of the degree students so enrolled who 
are receiving need-based assistance under title IV of this Act 
(other than loans for which an interest subsidy is paid pursuant 
to section 428), or 
"(2) a substantial percentage of students receiving Pell Grants 
in the second preceding fiscal year, in comparison with the 
percentage of students receiving Pell Grants at all such institu-
tions in such fiscal year, unless the requirement of this subdivi-
sion is waived under section 352(a). 
"(d) FULL-TIME EQUIVALENT STUDENTS.—For the purpose of this 
part, the term 'full-time equivalent students' means the sum of the 
^i 
number of students enrolled full time at an institution, plus the full-
time equivalent of the number of students enrolled part time (deter-
mined on the basis of the quotient of the sum of the credit hours of 
all part-time students divided by 12) at such institution. 
"(e) JUNIOR OR COMMUNITY COLLEGE.—For the purpose of this 
part, the term 'junior or community college' means an institution of 
higher education— 
"(1) that admits as regular students persons who are beyond 
the age of compulsory school attendance in the State in which 
the institution is located and who have the ability to benefit 
from the training offered by the institution; 
"(2) that does not provide an educational program for which it 
awards a bachelor's degree (or an equivalent degree); and 
"(3) that— 
"(A) provides an educational program of not less than 2 
years that is acceptable for full credit toward such a degree, 
or 
"(B) offers a 2-year program in engineering, mathematics, 
or the physical or biological sciences, designed to prepare a 
student to work as a technician or at the semiprofessional 
level in engineering, scientific, or other technological fields 
requiring the understanding and application of basic 
engineering, scientific, or mathematical 
principles of 
knowledge. 
100 STAT. 1294 
PUBLIC LAW 99-498—OCT. 17, 1986 
"DURATION OF GRANT 
20 use 1059. 
"SEC. 313. (a) GENERAL RULE.—The Secretary may award a grant 
to an eligible institution under this part for— 
"(1) not to exceed 3 years; 
"(2) not to exceed 4 years; or 
"(3) not to exceed 5 years. 
"(b) PROHIBITION.—An eligible institution that is awarded a 
grant— 
"(1) under paragraph (2) of subsection (a) shall not be eligible 
to receive a grant under this part during the 4 years imme-
diately following the period that it received such grant; and 
"(2) under paragraph (3) of subsection (a) shall not be eligible 
to receive a grant under this part during the 5 years imme-
diately following the period that it received such grant. 
"(c) PLANNING GRANTS.—Notwithstanding subsection (a), the Sec-
retary may award a grant to an eligible institution under this part 
for a period of one year for the purpose of preparation of plans and 
applications for a grant under this part. 
"PART B—STRENGTHENING HISTORICALLY BLACK COLLEGES AND 
UNIVERSITIES 
"FINDINGS AND PURPOSES 
20 use 1060. 
"SEC. 321. The Congress finds that— 
"(1) the historically Black colleges and universities have 
contributed significantly to the effort to attain equal oppor-
tunity through postsecondary education for Black, low-income, 
and educationally disadvantaged Americans; 
"(2) States and the Federal Government have discriminated 
in the allocation of land and financial resources to support 
7 use 301 note. 
Black public institutions under the Morrill Act of 1862 and its 
progeny, and against public and private Black colleges and 
universities in the award of Federal grants and contracts, and 
the distribution of Federal resources under this Act and other 
Federal programs which benefit institutions of higher edu-
cation; 
"(3) the current state of Black colleges and universities is 
partly attributable to the discriminatory action of the States 
and the Federal Government and this discriminatory action 
requires the remedy of enhancement of Black postsecondary 
institutions to ensure their continuation and participation in 
fulfilling the Federal mission of equality of educational oppor-
tunity; and 
"(4) financial assistance to establish or strengthen the phys-
ical plants, financial management, academic resources, and 
endowments of the historically Black colleges and universities 
are appropriate methods to enhance these institutions and 
facilitate a decrease in reliance on governmental financial sup-
port and to encourage reliance on endowments and private 
sources. 
"DEFINITIONS 
20 use 1061. 
"SEC. 322. For the purpose of this part: 
"(1) The term 'graduate' means an individual who has at-
tended an institution for at least three semesters and fulfilled 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1295 
academic requirements for undergraduate studies in not more 
than 5 consecutive school years. 
"(2) The term 'part B institution' means any historically 
Black college or university that was established prior to 1964, 
whose principal mission was, and is, the education of Black 
Americans, and that is accredited by a nationally recognized 
accrediting agency or association determined by the Secretary 
to be a reliable authority as to the quality of training offered or 
is, according to such an agency or association, making reason-
able progress toward accreditation. 
"(3) The term 'Pell Grant recipient' means a recipient of 
financial aid under subpart 1 of part A of title IV of this Act. 
"(4) The term 'professional and academic areas in which 
Blacks are underrepresented' shall be determined by the Sec-
retary and the Commissioner of the Bureau of Labor Statistics, 
on the basis of the most recent available satisfactory data, as 
professional and academic areas in which the percentage of 
Black Americans who have been educated, trained, and em-
ployed is less than the percentage of Blacks in the general 
population. 
"(5) The term 'school year' means the period of 12 months 
beginning July 1 of any calendar year and ending June 30 of the 
following calendar year. 
"GRANTS TO INSTITUTIONS 
"SEC. 323. (a) GENERAL AUTHORIZATION; USES OF FUNDS.—From 
20 use 1062. 
amounts available under section 358(a)(2) in any fiscal year the 
Secretary shall make grants (under section 324) to institutions 
which have applications approved by the Secretary (under section 
325) for any of the following uses: 
"(1) Purchase, rental, or lease of scientific or laboratory equip-
ment for educational purposes, including instructional and 
research purposes. 
"(2) Construction, maintenance, renovation, and improvement 
in classroom, library, laboratory, and other instructional 
facilities. 
"(3) Support of faculty exchanges and faculty fellowships to 
assist in attaining advanced degrees in their field of instruction. 
"(4) Academic instruction in disciplines in which Black 
Americans are underrepresented. 
"(5) Purchase of library books, periodicals, microfilm, and 
other educational materials. 
"(6) Tutoring, counseling, and student service programs 
designed to improve academic success. 
"(b) LIMITATIONS.—(1) No grant may be made under this Act for 
any educational program, activity, or service related to sectarian 
instruction or religious worship, or provided by a school or depart-
ment of divinity. For the purpose of this subsection, the term 'school 
or department of divinity' means an institution whose program is 
specifically for the education of students to prepare them to become 
ministers of religion or to enter upon some other religious vocation, 
or to prepare them to teach theological subjects. 
"(2) Not more than 50 percent of the allotment of any institution 
may be available for the purpose of constructing or maintaining a 
classroom, library, laboratory, or other instructional facility. 
100 STAT. 1296 
PUBLIC LAW 99-498—OCT. 17, 1986 
"ALLOTMENTS TO INSTITUTIONS 
20 use 1063. 
"SEC. 324. (a) ALLOTMENT; PELL GRANT BASIS.—From the amounts 
appropriated to carry out this part for any fiscal year, the Secretary 
shall allot to each part B institution a sum which bears the same 
ratio to one-half that amount as the number of Pell Grant recipients 
in attendance at such institution at the end of the school year 
preceding the beginning of that fiscal year bears to the total number 
of Pell Grant recipients at all part B institutions. 
"(b) ALLOTMENT; GRADUATES BASIS.—From the amounts appro-
priated to carry out this part for any fiscal year, the Secretary shall 
allot to each part B institution a sum which bears the same ratio to 
one-fourth that amount as the number of graduates for such school 
year at such institution bears to the total number of graduates for 
such school year at all part B institutions. 
"(c) ALLOTMENT; GRADUATE AND PROFESSIONAL STUDENT BASIS.— 
From the amounts appropriated to carry out this part for any fiscal 
year, the Secretary shall allot to each part B institution a sum 
which bears the same ratio to one-fourth that amount as the 
number of graduates, who are admitted to and in attendance at a 
graduate or professional school in a degree program in disciplines in 
which Blacks are underrepresented, bears to the number of such 
graduates for all part B institutions. 
"(d) REALLOTMENT.—The amount of any part B institution's allot-
ment under subsection (a), (b), or (c) for any fiscal year which the 
Secretary determines will not be required for such institution for 
the period such allotment is available shall be available for reallot-
ment from time to time on such date during such period as the 
Secretary may determine to other part B institutions in proportion 
to the original allotment to such other institutions under this 
section for such fiscal year. 
"(e) SPECIAL MERGER RULE.—(1) The Secretary shall permit any 
eligible institution for a grant under part B in any fiscal year prior 
to the fiscal year 1986 to apply for a grant under this part if the 
eligible institution has merged with another institution of higher 
education which is not so eligible or has merged with an eligible 
institution. 
"(2) The Secretary may establish such regulations as may be 
necessary to carry out the requirement of paragraph (1) of this 
subsection. 
"(f) SPECIAL RULE FOR CERTAIN DISTRICT OF COLUMBIA ELIGIBLE 
INSTITUTIONS.—In any fiscal year that the Secretary determines that 
Howard University or the University of the District of Columbia 
will receive an allotment under subsections (b) and (c) of this section 
which is not in excess of amounts received by Howard University 
under the Act of March 2, 1867 (14 Stat. 438; 20 U.S.C. 123), relating 
to annual authorization of appropriations for Howard University, or 
by the University of the District of Columbia under the District of 
Columbia Self-Government and Governmental Reorganization Act 
(87 Stat. 774) for such fiscal year, then Howard University and the 
University of the District of Columbia, as the case may be, shall be 
ineligible to receive an allotment under this section. 
"APPLICATIONS 
20 use 1063a. 
"SEC. 325. (a) CONTENTS.—No part B institution shall be entitled to 
its allotment of Federal funds for any grant under section 324 for 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1297 
any period unless that institution meets the requirements of sub-
paragraphs (C), (D), and (E) of section 312(b)(1) and submits an 
application to the Secretary at such time, in such manner, and 
containing or accompanied by such information, as the Secretary 
may reasonably require. Each such application shall— 
"(1) provide that the payments under this Act will be used for 
the purposes set forth in section 322; and 
"(2) provide for making an annual report to the Secretary and 
provide for— 
"(A) conducting, except as provided in subparagraph (B), 
a financial and compliance audit of an eligible institution, 
with regard to any funds obtained by it under this title at 
least once every 2 years and covering the period since the 
most recent audit, conducted by a qualified, independent 
organization or person in accordance with standards estab-
lished by the Comptroller General for the audit of govern-
mental organizations, programs, and functions, and as 
prescribed in regulations of the Secretary, the results of 
which shall be submitted to the Secretary; or 
"(B) with regard to an eligible institution which is au-
dited under chapter 75 of title 31, United States Code, 
31 USC 7501. 
deeming such audit to satisfy the requirements of subpara-
graph (A) for the period covered by such audit. 
"(b) APPROVAL.—The Secretary shall approve any application 
which meets the requirements of subsection (a) and shall not dis-
approve any application submitted under this part, or any modifica-
tion thereof, without first affording such institution reasonable 
notice and opportunity for a hearing. 
"PROFESSIONAL OR GRADUATE INSTITUTIONS 
"SEC. 326. (a) GENERAL AUTHORIZATION.—(1) Subject to the avail- Grants, 
ability of funds appropriated to carry out this section, the Secretary 
20 USC 1063b. 
shall award program grants to each of the postgraduate institutions 
listed in subsection (e) that is determined by the Secretary to be 
making a substantial contribution to the legal, medical, dental, 
veterinary, or other graduate education opportunities for Black 
Americans. 
"(2) No grant in excess of $500,000 may be made under this section 
unless the postgraduate institution provides assurances that 50 
percent of the cost of the purposes for which the grant is made will 
be paid from non-Federal sources. 
"(b) DURATION.—Grants shall be made for a period not to exceed 5 
years. No more than two 5-year grants (for a period of not more than 
10 years) may be made to any one undergraduate or postgraduate 
institution. 
"(c) USES OF FUNDS.—A grant under this section may be used for— 
"(1) any of the purposes enumerated under section 323; 
"(2) to establish or improve a development office 
to 
strengthen and increase contributions from alumni and the 
private sector; and 
"(3) to assist in the establishment or maintenance of an 
institutional endowment to facilitate financial independence 
pursuant to section 333 of this title. 
"(d) APPLICATION.—Any institution eligible for a grant under this 
section shall submit an application which— 
100 STAT. 1298 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(1) demonstrates how the grant funds will be used to improve 
graduate educational opportunities for Black and low-income 
students, and lead to greater financial independence; and 
"(2) provides, in the case of applications for grants in excess of 
$500,000, the assurances required by subsection (a)(2) and speci-
fies the manner in which the eligible institution is going to pay 
the non-Federal share of the cost of the application. 
"(e) 
ELIGIBLE 
PROFESSIONAL 
OR 
GRADUATE 
INSTITUTIONS.— 
Independent professional or graduate institutions eligible for grants 
under subsection (a) include— 
"(1) Morehouse School of Medicine; 
"(2) Meharry Medical School; 
"(3) Charles R. Drew Postgraduate Medical School; 
"(4) Atlanta University; and 
"(5) Tuskegee Institute School of Veterinary Medicine. 
Grants. 
20 u s e 1063c. 
REPORTING AND AUDIT REQUIREMENTS 
"SEC. 327. (a) RECORDKEEPING.—Each recipient of a grant under 
this Act shall keep such records as the Secretary shall prescribe, 
including records which fully disclose— 
"(1) the amount and disposition by such recipient of the 
proceeds of such assistance; 
"(2) the cost of the project or undertaking in connection with 
which such assistance is given or used; 
"(3) the amount of that portion of the cost of the project or 
undertaking supplied by other sources; and 
"(4) such other records as will facilitate an effective audit. 
"
O
t
>
) REPAYMENT OF UNEXPENDED FUNDS.—Any funds paid to an 
institution and not expended or used for the purposes for which the 
funds were paid within 10 years following the date of the initial 
grant awarded to an institution under part B of this title shall be 
repaid to the Treasury of the United States. 
"PART C—CHALLENGE GRANTS FOR INSTITUTIONS ELIGIBLE FOR 
ASSISTANCE UNDER PART A OR PART B 
20 u s e 1064. 
Disadvantaged 
persons. 
Minorities. 
ESTABUSHMENT OF CHALLENGE GRANT PROGRAM 
"SEC. 331. (a) GENERAL AUTHORIZATION; ELIGIBIUTY.—(1) From the 
sums available under section 360(a)(3) for each fiscal year, the 
Secretary may award a challenge grant to each institution— 
"(A) which is an eligible institution under part A or would be 
considered to be such an institution if section 312(bXlXC) re-
ferred to a postgraduate degree rather than a bachelor's degree; 
"(B) which is an institution under part B or would be consid-
ered to be such an institution if section 324 referred to a 
postgraduate degree rather than a baccalaureate degree; or 
"(C) which is an institution that makes a substantial contribu-
tion to postgraduate medical educational opportunities for 
minorities and the economically disadvantaged. 
"(2) The Secretary may waive the requirements set forth in 
subparagraphs (A) and (B) of paragraph (1) with respect to a post-
graduate degree in the case of any institution otherwise eligible 
under such paragraph for a challenge grant upon determining that 
the institution makes a substantial contribution to medical edu-
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1299 
cation opportunities for minorities and the economically disadvan-
taged. 
"(b) USES OF FUNDS.—A grant under this section may be used by 
an institution eligible for a grant under this section to assist the 
institution to achieve financial independence. 
"(c) DURATION OF GRANT.—The Secretary may make a grant 
under this section for a period of not more than 5 years, subject to 
annual appropriations. 
"(d) CONTENTS OF APPLICATIONS.—Any institution eligible for a state and local 
challenge grant under this section may apply for such a grant under governments, 
section 351, except that the application for the purpose of this part 
shall— 
"(1) provide assurances that funds will be available to the 
applicant within one year to match funds that the Secretary is 
requested to make available to the institution as a challenge 
grant; 
"(2) in the case of an application by a public institution, 
contain the recommendations of an appropriate State agency 
responsible for higher education in the State, or provide evi-
dence that the institution requested the State agency to com-
ment but the State agency failed to comment; and 
"(3) demonstrate how challenge grant funds will be used to 
achieve financial independence. 
"(e) NOTICE OF APPROVAL.—Not later than April 1 of the fiscal 
year preceding the fiscal year in which any grant is to be made 
under this section, the Secretary shall determine which institutions 
will receive challenge grants under such section and notify the 
institutions of the amount of the grant. 
"(f) PREFERENCE.—In approving applications for such grants, pref-
erence shall be given to institutions which are receiving, or have 
received, grants under part A or part B of this title. 
"ENDOWMENT CHALLENGE GRANTS 
"SEC. 332. (a) PURPOSE; DEFINITIONS.—(1) The purpose of this 20 use 1065. 
section is to establish a program to provide matching grants to 
eligible institutions of higher education in order to establish or 
increase endowment funds at such institutions, to provide additional 
incentives to promote fund raising activities by such institutions, 
and to foster increased independence and self-sufficiency at such 
institutions. 
"(2) For the purpose of this section: 
"(A) The term 'endowment fund' means a fund established by 
State law, by an institution of higher education, or by a founda-
tion which is exempt from taxation and is maintained for the 
purpose of generating income for the support of the institution, 
but which shall not include real estate. 
"(B) The term 'endowment fund corpus' means an amount 
equal to the grant or grants awarded under this section plus an 
amount equal to such grant or grants provided by the 
institution. 
"(C) The term 'endowment fund income' means an amount 
equal to the total value of the endowment fund established 
under this section minus the endowment fund corpus. 
"(b) GRANTS AUTHORIZED.—(1) From sums available for this sec-
tion under section 360, the Secretary is authorized to award chal-
lenge grants to eligible institutions of higher education to establish 
71-19A 0 - 89 - 7 : QL. 3 Part2 
100 STAT. 1300 
PUBLIC LAW 99-498—OCT. 17, 1986 
or increase an endowment fund at such institution. Such grants 
shall be made only to eligible institutions described in paragraph (4) 
whose applications have been approved pursuant to subsection (g). 
"(2)(A) Except as provided in subparagraph (B), no institution 
shall receive a grant under this section, unless such institution has 
deposited in its endowment fund established under this section an 
amount equal to the amount of such grant. The source of funds for 
this institutional match shall not include Federal funds or funds 
* " 
from an existing endowment fund. 
"(B) In any fiscal year in which the appropriations for this part 
exceeds $10,000,000, the Secretary may make a grant under this 
part to an eligible institution of higher education if such institu-
tion— 
"(i) has deposited in its endowment fund established under 
this section an amount which is equal to one-half of the amount 
of such grant; and 
"(ii) applies for a grant in an amount exceeding $1,000,000. 
"(C) An eligible institution of higher education that is awarded a 
grant under this section shall not be eligible to reapply for a grant 
under this section during the 10 years immediately following the 
period that it received such grant. 
"(3) The period of a grant under this section shall be not more 
than 20 years. During the grant period, an institution may not 
withdraw or expend any of the endowment fund corpus. After the 
termination of the grant period, an institution may use the endow-
ment fund corpus plus any endowment fund income for any edu-
cational purpose. 
"(4)(A) An institution of higher education is eligible to receive a 
grant under this section if it is an eligible institution as described in 
section 331(a)(1). 
"(B) No institution shall be ineligible for a challenge grant under 
this section for a fiscal year by reason of the previous receipt of such 
a grant but no institution shall be eligible to receive such a grant for 
' V 
more than 2 fiscal years out of any period of 5 consecutive fiscal 
years. 
"(5) Except as provided in paragraph (2)(B), a challenge grant 
under this section to an eligible institution year shall— 
"(A) not be less than $50,000 for any fiscal year; and 
"(B) not be more than (i) $250,000 for fiscal year 1987; or (ii) 
$500,000 for fiscal year 1988 or any succeeding fiscal year. 
"(6)(A) An eligible institution may designate a foundation, which 
was established for the purpose of raising money for the institution, 
as the recipient of the grant awarded under this section. 
"(B) The Secretary shall not award a grant to a foundation on 
behalf of an institution unless— 
"(i) the institution assures the Secretary that the foundation 
is legally authorized to receive the endowment fund corpus and 
is legally authorized to administer the fund in accordance with 
this section and any implementing regulation; 
"(ii) the foundation agrees to administer the fund in accord-
ance with the requirements of this section and any implement-
ing regulation; and 
"(iii) the institution agrees to be liable for any violation by the 
foundation of the provisions of this section and any implement-
ing regulation, including any monetary liability that may arise 
as a result of such violation. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1301 
"(c) GRANT AGREEMENT; ENDOWMENT FUND PROVISIONS.—(1) 
An 
institution awarded a grant under this section shall enter into an 
agreement with the Secretary containing satisfactory assurances 
that it will (A) immediately comply with the matching requirements 
of subsection (b)(2), (B) establish an endowment fund independent of 
any other such fund of the institution, (C) invest the endowment 
fund corpus, and (D) meet the other requirements of this section. 
"(2)(A) An institution shall invest the endowment fund corpus and 
endowment fund income in low-risk securities in which a regulated 
insurance company may invest under the law of the State in which 
the institution is located such as a federally insured bank savings 
account or comparable interest-bearing account, certificate of de-
posit, money market fund, mutual fund, or obligations of the United 
States. 
"(B) The institution, in investing the endowment fund established 
under this section, shall exercise the judgment and care, under the 
circumstances then prevailing, which a person of prudence, discre-
tion, and intelligence would exercise in the management of such 
person's own affairs. 
"(3)(A) An institution may withdraw and expend the endowment 
fund income to defray any expenses necessary to the operation of 
such college, including expenses of operations and maintenance, 
administration, academic and support personnel, construction and 
renovation, community and student services programs, and tech-
nical assistance. 
"(B)(i) Except as provided in clause (ii), an institution may not 
spend more than 50 percent of the total aggregate endowment fund 
income earned prior to the time of expenditure. 
"(ii) The Secretary may permit an institution to spend more than 
50 percent of the endowment fund income notwithstanding clause (i) 
if the institution demonstrates such an expenditure is necessary 
because of (I) a financial emergency, such as a pending insolvency or 
temporary liquidity problem; (II) a life-threatening situation occa-
sioned by a natural disaster or arson; or (III) any other unusual 
occurrence or exigent circumstance. 
"(d) REPAYMENT PROVISIONS.—(1) If at any time an institution 
withdraws part of the endowment fund corpus, the institution shall 
repay to the Secretary an amount equal to 50 percent of the 
withdrawn amount, which represents the Federal share, plus 
income earned thereon. The Secretary may use such repaid funds to 
make additional challenge grants, or to increase existing endow-
ment grants, to other eligible institutions. 
"(2) If an institution expends more of the endowment fund income 
than is permitted under subsection (c), the institution shall repay 
the Secretary an amount equal to 50 percent of the amount improp-
erly expended (representing the Federal share thereof). The Sec-
retary may use such repaid fund to make additional challenge 
grants, or to increase existing challenge grants, to other eligible 
institutions. 
"(e) AUDIT INFORMATION.—An institution receiving a grant under 
this section shall provide to the Secretary (or a designee thereof) 
such information (or access thereto) as may be necessary to audit or 
examine expenditures made from the endowment fund corpus or 
income in order to determine compliance with this section. 
"(f) SELECTION CRITERIA.—In selecting eligible institutions for grants 
under this section for any fiscal year, the Secretary shall— 
Securities. 
Insurance. 
Banks and 
banking. 
100 STAT. 1302 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(1) give priority to an applicant which is a recipient of a grant 
made under part A or B of this title during the academic year in 
which the applicant is applying for a grant under this section; 
"(2) give priority to an applicant with a greater need for such 
a grant, based on the current market value of the applicant's 
existing endowment in relation to the number of full-time 
equivalent students enrolled at such institution; and 
"(3) consider— 
"(A) the effort made by the applicant to build or maintain 
its existing endowment fund; and 
"(B) the degree to which an applicant proposes to match 
the grant with nongovernmental funds. 
"(g) APPLICATION.—Any institution which is eligible for assistance 
under this section may submit to the Secretary a grant application 
at such time, in such form, and containing such information as the 
Secretary may prescribe. Subject to the availability of appropria-
tions to carry out this section and consistent with the requirement 
of subsection (f), the Secretary may approve an application for a 
grant if an institution, in its application, provides adequate assur-
ances that it will comply with the requirements of this section. 
"(h) TERMINATION AND RECOVERY PROVISIONS.—(1) After notice 
and an opportunity for a hearing, the Secretary may terminate and 
recover a grant awarded under this section if the grantee institu-
tion— 
"(A) expends portions of the endowment fund corpus or ex-
pends more than the permissible amount of the endowment 
funds income as prescribed in subsection (c)(3); 
"(B) fails to invest the endowment fund in accordance with 
the investment standards set forth in subsection (c)(2); or 
"(C) fails to properly account to the Secretary concerning the 
investment and expenditures of the endowment funds. 
"(2) If the Secretary terminates a grant under paragraph (1), the 
grantee shall return to the Secretary an amount equal to the sum of 
each original grant under this section plus income earned thereon. 
The Secretary may use such repaid funds to make additional endow-
ment grants, or to increase existing challenge grants, to other 
eligible institutions under this part. 
"PART D—GENERAL PROVISIONS 
"APPUCATIONS FOR ASSISTANCE 
20 use 1066. 
"SEC. 351. (a) APPLICATION REQUIRED; APPROVAL.—Any institution 
which is eligible for assistance under this title shall submit to the 
Secretary an application for assistance at such time, in such form, 
and containing such information, as may be necessary to enable the 
Secretary to evaluate its need for assistance. Subject to the availabil-
ity of appropriations to carry out this title, the Secretary may 
approve an application for a grant under this title if the application 
meets the requirements of subsection (b) and shows that the ap-
plicant is eligible for assistance in accordance with the part of this 
title under which the assistance is sought. 
Grants. 
"(b) CONTENTS.—An institution, in its application for a grant, 
shall— 
"(1) set forth, or describe how the institution (other than an 
- 
institution applying under part C) will develop, a comprehen-
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1303 
sive development plan to strengthen the institution's academic 
quality and institutional management, and otherwise provide 
for institutional self-sufficiency and growth (including measur-
able objectives for the institution and the Secretary to use in 
monitoring the effectiveness of activities under this title); 
"(2) set forth policies and procedures to ensure that Federal 
funds made available under this title for any fiscal year will be 
used to supplement and, to the extent practical, increase the 
^ 
funds that would otherwise be made available for the purposes 
of section 311(b) or 323, and in no case supplant those funds; 
"(3) set forth policies and procedures for evaluating the 
effectiveness in accomplishing the purpose of the activities for 
which a grant is sought under this title; 
"(4) provide for such fiscal control and fund accounting proce-
dures as may be necessary to ensure proper disbursement of and 
accounting for funds made available to the applicant under this 
title; 
"(5) provide (A) for making such reports, in such form and Reports. 
containing such information, as the Secretary may require to 
carry out the functions under this title, including not less than 
one report annually setting forth the institution's progress 
toward achieving the objectives for which the funds were 
awarded, and (B) for keeping such records and affording such 
access thereto, as the Secretary may find necessary to assure 
the correctness and verification of such reports; 
"(6) provide that the institution will comply with the limita-
tions set forth in section 356; 
"(7) describe in a comprehensive manner any proposed project 
for which funds are sought under the application and include— 
"(A) a description of the various components of the pro-
posed project, including the estimated time required to 
complete each such component; 
"(B) in the case of any development project which consists 
of several components (as described by the applicant pursu-
ant to subparagraph (A)), a statement identifying those 
components which, if separately funded, would be sound 
investments of Federal funds and those components which 
would be sound investments of Federal funds only if funded 
under this title in conjunction with other parts of the 
development project (as specified by the applicant); 
"(C) an evaluation by the applicant of the priority given 
any proposed project for which funds are sought in relation 
to any other projects for which funds are sought by the 
applicant under this title, and a similar evaluation regard-
ing priorities among the components of any single proposed 
project (as described by the applicant pursuant to subpara-
graph (A)); 
"(D) information explaining the manner in which the 
proposed project will assist the applicant to prepare for the 
.-
critical financial problems that all institutions of higher 
education will face during the subsequent decade as a result 
of declining enrollment, and other problems; 
"(E) a detailed budget showing the manner in which 
funds for any proposed project would be spent by the ap-
plicant; and 
100 STAT. 1304 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(F) a detailed description of any activity which involves 
the expenditure of more than $25,000, as identified in the 
budget referred to in subparagraph (E); and 
"(8) include such other information as the Secretary may 
prescribe. 
"(c) PRIORITY CRITERIA PUBLICATION REQUIRED.—The Secretary 
shall publish in the Federal Register, pursuant to chapter 5 of title 
5 use 500 et seq. 5, United States Code, all policies and procedures required to exer-
cise the authority set forth in subsection (a). No other criteria, 
policies, or procedures shall apply. 
"(d) ELIGIBILITY DATA.—The Secretary shall use the most recent 
and relevant data concerning the number and percentage of stu-
dents receiving need-based assistance under title IV of this Act in 
making eligibility determinations under section 312 and shall ad-
vance the base-year forward following each annual grant cycle. 
20 u s e 1067. 
State and local 
governments. 
Disadvantaged 
persons. 
Minorities. 
Rural areas. 
Indians. 
Reports. 
WAIVER AUTHORITY AND REPORTING REQUIREMENT 
"SEC. 352. (a) WAIVER REQUIREMENTS; NEED-BASED ASSISTANCE 
STUDENTS.—The Secretary shall waive the requirements set forth in 
section 312(b)(1)(A) in the case of an institution— 
"(1) which is extensively subsidized by the State in which it is 
located and charges low or no tuition; 
"(2) which serves a substantial number of low- and middle-
income students as a percentage of its total student population; 
"(3) which is contributing substantially to increasing higher 
education 
opportunities 
for educationally 
disadvantaged, 
underrepresented, or minority students, who are low-income 
individuals; 
"(4) which is substantially increasing higher educational 
opportunities for individuals in rural or other isolated areas 
which are unserved by postsecondary institutions; 
"(5) located on or near an Indian reservation or a substantial 
population of Indians, if the Secretary determines that the 
waiver will substantially increase higher education opportuni-
ties appropriate to the needs of American Indians; or 
"(6) wherever located, if the Secretary determines that the 
waiver will substantially increase higher education opportuni-
ties appropriate to the needs of Black Americans, Hispanic 
Americans, Native Americans, Asian Americans, or Pacific 
Islanders, including Native Hawaiians. 
"(b) WAIVER DETERMINATIONS; EXPENDITURES.—(1) The Secretary 
may waive the requirements set forth in section 312(b)(1)(B) if the 
Secretary determines, based on persuasive evidence submitted by 
the institution, that the institution's failure to meet that criterion is 
due to factors which, when used in the determination of compliance 
with such criterion, distort such determination, and that the institu-
tion's designation as an eligible institution under part A is other-
wise consistent with the purposes of such parts. 
"(2) The Secretary shall submit to the Congress every other year a 
report concerning the institutions which, although not satisfying the 
criterion contained in section 312(b)(1)(B), have been determined to 
be eligible institutions under part A institutions which enroll 
significant numbers of Black American, Hispanic, Native American, 
Asian American, or Native Hawaiian students under part A, as the 
case may be. Such report shall— 
» „ . > . . . . 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1305 
"(A) identify the factors referred to in paragraph (1) which 
were considered by the Secretary as factors that distorted the 
determination of compHance with subparagraphs (A) and (B) of 
section 312(b)(1); and 
"(B) contain a list of each institution determined to be an 
eligible institution under part A including a statement of the 
reasons for each such determination. 
APPLICATION REVIEW PROCESS 
"SEC. 353. (a) REVIEW PANEL.—(1) All applications submitted 
20 use 1068. 
under this title by institutions of higher education shall be read by a 
panel of readers composed of individuals selected by the Secretary. 
The Secretary shall assure that no individual assigned under this 
section to review any application has any conflict of interest with 
regard to the application which might impair the impartiality with 
which the individual conducts the review under this section. 
"(2) The Secretary shall take care to assure that representatives of 
historically and predominantly Black colleges, Hispanic institutions, 
Native American colleges and universities, and institutions with 
substantial numbers of Hispanics, Native Americans, Asian Ameri-
cans, and Native American Pacific Islanders (including Native 
Hawaiians) are included as readers. 
', 
"(3) All readers selected by the Secretary shall receive thorough Grants, 
instruction from the Secretary regarding the evaluation process for 
applications submitted under this title and consistent with the 
provisions of this title, including— 
"(A) explanations and examples of the types of activities 
referred to in section 311(b) that should receive special consider-
ation for grants awarded under part A and of the types of 
activities referred to in section 323 that should receive special 
consideration for grants awarded under part B; 
f 
"(B) an enumeration of the factors to be used to determine the 
quality of applications submitted under this title; and 
"(C) an enumeration of the factors to be used to determine 
whether a grant should be awarded for a project under this title, 
the amount of any such grant, and the duration of any such 
grant. 
"(b) RECOMMENDATIONS OF PANEL.—In awarding grants under this 
title, the Secretary shall take into consideration the recommenda-
tions of the panel made under subsection (a). 
"(c) NOTIFICATION.—Not later than June 30 of each year, the 
Secretary shall notify each institution of higher education making 
an application under this title o
f
— 
"(1) the scores given the applicant by the panel pursuant to 
this section; 
,;, 
"(2) the recommendations of the panel with respect to such 
application; and 
"(3) the reasons for the decision of the Secretary in awarding 
or refusing to award a grant under this title, and any modifica-
tions, if any, in the recommendations of the panel made by the 
Secretary. 
"COOPERATIVE ARRANGEMENTS 
WGl C^-
"SEC. 354. (a) GENERAL AUTHORITY.—The Secretary may make 
grants to encourage cooperative arrangements— 
Grants. 
20 u s e 1069. 
100 STAT. 1306 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(1) with funds available to carry out part A, between institu-
tions eligible for assistance under part A and between such 
institutions and institutions not receiving assistance under this 
title; or 
"(2) with funds available to carry out part B, between institu-
tions eligible for assistance under part B and institutions not 
receiving assistance under this title; 
for the activities described in section 311(b) or section 323, as the 
case may be, so that the resources of the cooperating institutions 
might be combined and shared to achieve the purposes of such parts 
and avoid costly duplicative efforts and to enhance the development 
of part A and part B eligible institutions. 
"(b) PRIORITY.—The Secretary shall give priority to grants for the 
purposes described under subsection (a) whenever the Secretary 
determines that the cooperative arrangement is geographically and 
economically sound or will benefit the applicant institution. 
"(c) DURATION.—Grants to institutions having a cooperative 
arrangement may be made under this section for a period as deter-
mined under section 313 or section 323. 
i- 
SPECIAL PAYMENTS RULES 
Grants. 
"SEC. 355. (a) HISTORICALLY BLACK COLLEGE PAYMENTS RULE.— 
20 use 1069a. 
Any historically Black college or university which, prior to Septem-
ber 30, 1986, received a grant under part A of this title as in effect 
prior to such date and continues to receive a grant under such part 
A for any fiscal year beginning after September 30,1986, and ending 
prior to October 1, 1991, shall be paid from amounts appropriated to 
carry out part B of this title. 
"(b) OTHER INSTITUTIONS SPECIAL PAYMENT RULE.—Each eligible 
institution other than an historically Black college or university 
which received a grant under part B of this title as in effect prior to 
such date and continues to receive a grant under such part B for any 
fiscal year beginning after September 30, 1986, and ending prior to 
October 1, 1991, shall be paid out of appropriations made pursuant 
to part A. 
"(c) SPECIAL RULE FOR UNOBUGATED PART A AND PART B FUNDS.— 
In any fiscal year in which amounts appropriated pursuant to part 
A or part B for this title are available for obligation in the year 
succeeding the year in which the funds were appropriated, the 
Secretary shall make such funds available for grants under section 
332, relating to the endowment challenge grant program, for the 
same type of institution for which the grants would have been made 
had the funds been paid pursuant to such part A or part B. 
"ASSISTANCE TO INSTITUTIONS UNDER OTHER PROGRAMS 
20 use 1069b. 
"SEC. 356. (a) ASSISTANCE EUGIBIUTY.—Each institution which the 
Secretary determines to be an institution eligible under part A or an 
institution eligible under part B shall be eligible for waivers in 
accordance with subsection O
t
>
)
. 
"Ot)) WAIVER APPUCABIUTY.—(1) Subject to, and in accordance 
with, regulations promulgated for the purpose of this section, in the 
case of any application by an institution referred to in subsection (a) 
for assistance under any programs specified in paragraph (2), the 
Secretary is authorized, if such application is otherwise approvable, 
to waive any requirement for a non-Federal share of the cost of the 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1307 
program or project, or, to the extent not inconsistent with other law, 
to give, or require to be given, priority consideration of the applica-
tion in relation to applications from other institutions. 
"(2) The provisions of this section shall apply to any program 
authorized by title II, IV, VII, or VIII of this Act. 
"(c) LIMITATION.—The Secretary shall not waive, under subsection 
(b), the non-Federal share requirement for any program for applica-
tions which, if approved, would require the expenditure of more 
than 10 percent of the appropriations for the program for any fiscal 
year. 
"LIMITATIONS 
"SEC. 357. The funds appropriated under section 360 may not be 
used— 
"(1) for a school or department of divinity or any religious 
worship or sectarian activity; 
"(2) for an activity that is inconsistent with a State plan for 
desegregation of higher education applicable to such institution; 
"(3) for an activity that is inconsistent with a State plan of 
higher education applicable to such institution; or 
"(4) for purposes other than the purposes set forth in the 
approved application under which the funds were made avail-
able to the institution. 
State and local 
governments. 
20 u s e 1069c. 
PENALTIES 
"SEC. 358. Whoever, being an officer, director, agent, or employee 
20 USC I069d. 
of, or connected in any capacity with, any recipient of Federal 
financial assistance or grant pursuant to this title embezzles, will-
fully misapplies, steals, or obtains by fraud any of the funds which 
are the subject of such grant or assistance, shall be fined not more 
than $10,000 or imprisoned for not more than 2 years, or both. 
"CHALLENGE GRANT APPLICATION REQUIRED 
"SEC. 359. The Secretary shall not make a Challenge Grant to any 20 USC 1069e. 
grantee institution under section 313(a)(2) or under part B which has 
not applied for funds under part C and complied with section 
332(a)(1) of part C after September 30,1989. 
"AUTHORIZATIONS OF APPROPRIATIONS 
"SEC, 360. (a) AUTHORIZATIONS.—(1) There are authorized to be 20 USC I069f. 
appropriated to carry out part A $120,000,000 for fiscal year 1987, 
and such sums as may be necessary for the 4 succeeding fiscal years. 
"(2)(A) There are authorized to be appropriated to carry out part B 
(other than section 326) $100,000,000 for fiscal year 1987, and such 
sums as may be necessary for the 4 succeeding fiscal years. 
"(B) There are authorized to be appropriated to carry out section 
326 $5,000,000 for fiscal year 1987, and such sums as may be 
necessary for the 4 succeeding fiscal years. 
"(3) There are authorized to be appropriated to carry out part C 
$20,000,000 for fiscal year 1987, and such sums as may be necessary 
for the 4 succeeding fiscal years. 
"(4) Funds appropriated for part C shall remain available until 
expended. 
"(b) USE OF MULTIPLE YEAR AWARDS.—In the event of a multiple 
year award to any institution under this title, the Secretary shall 
100 STAT. 1308 
PUBLIC LAW 99-498—OCT. 17, 1986 
20 use 1051 
note. 
U< 
make funds available for such award from funds appropriated for 
this title for the fiscal year in which such funds are to be used by the 
recipient. 
"(c) RESERVATIONS.—If the amount appropriated under subsection 
(a)(1) for part A for any fiscal year beginning after September 30, 
1986, equals or exceeds the amount appropriated for such part for 
fiscal year 1986— 
"(1) the Secretary shall, for such fiscal year, make available 
for use for the purposes of part A to institutions that are junior 
or community colleges not less than $51,400,000; and 
"(2) the Secretary shall, for such fiscal year— 
"(A) allocate 25 percent of the excess (above the amount 
^d , . 
appropriated for part A for fiscal year 1986) among eligible 
institutions with the highest percentages of students who 
are Black Americans, Hispanic Americans, Native Ameri-
cans, Asian Americans, Native Hawaiians, or Pacific 
Islanders, or any combination thereof; and 
"(B) allocate 75 percent of such excess among other eli-
gible institutions. 
"(d) RATABLE REDUCTION IN FISCAL YEARS IN WHICH AMOUNTS 
APPROPRIATED ARE INSUFFICIENT.—In any fiscal year in which the 
sums appropriated for part A are insufficient to make the reserva-
tions required by subsection (c) of this section, the Secretary shall 
ratably reduce the amount of the reservation.". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall take effect July 1,1987. 
TITLE IV—STUDENT ASSISTANCE 
SEC. 401. STUDENTS GRANTS REAUTHORIZED. 
(a) AMENDMENT.—Part A of title IV of the Act (20 U.S.C. 1070 et 
seq.) is amended to read as follows: 
"TITLE IV—STUDENT ASSISTANCE 
"PART A—GRANTS TO STUDENTS IN ATTENDANCE AT INSTITUTIONS OF 
HIGHER EDUCATION 
State and local 
governments. 
Disadvantaged 
persons. 
20 use 1070. 
STATEMENT OF PURPOSE; PROGRAM AUTHORIZATION 
"SEC. 401. (a) PURPOSE.—It is the purpose of this part, to assist in 
making available the benefits of postsecondary education to eligible 
students (defined in accordance with section 484) in institutions of 
higher education by— 
"(1) providing basic educational opportunity grants to all 
it, eligible students; 
"(2) providing supplemental educational opportunity grants to 
I
S
O those students who demonstrate financial need; 
St* 
"(3) providing for payments to the States to assist them in 
making financial aid available to such students; 
•
; • 
"(4) providing for special programs and projects designed (A) 
to identify and encourage qualified youths with financial or 
cultural need with a potential for postsecondary education, (B) 
•ii to prepare students from low-income families for postsecondary 
education, and (C) to provide remedial (including remedial lan-
sk guage study) and other services to students; and 
J 
"(5) providing assistance to institutions of higher education. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1309 
"(b) SECRETARY REQUIRED TO CARRY OUT PURPOSES.—The Sec-
retary shall, in accordance with subparts 1 through 8, carry out 
programs to achieve the purposes of this part. 
"SUBPART 1—BASIC EDUCATIONAL OPPORTUNITY GRANTS 
BASIC EDUCATIONAL OPPORTUNITY GRANTS: AMOUNT AND 
DETERMINATIONS; APPLICATIONS 
"SEC. 
411. (a) PROGRAM AUTHORITY AND METHOD OF DISTRIBU- 20usci070a. 
TION.—(1) The Secretary shall, during the period beginning July 1, 
1972, and ending September 30,1992, pay to each eligible institution 
such sums as may be necessary to pay to each eligible student 
(defined in accordance with section 484) for each academic year 
during which that student is in attendance at an institution of 
higher education, as an undergraduate, a basic grant in the amount 
for which that student is eligible, as determined pursuant to para-
graph (2). Not less than 85 percent of such sums shall be advanced to 
eligible institutions prior to the start of each payment period and 
shall be based upon an amount requested by the institution as 
needed to pay eligible students. 
"(2) Nothing in this section shall be interpreted to prohibit the 
Secretary from paying directly to students, in advance of the begin-
ning of the academic term, an amount for which they are eligible, in 
cases where the eligible institution elects not to participate in the 
disbursement system required by paragraph (1). 
"(3) Basic grants made under this subpart shall be known as 'Pell 
Grants'. 
"(b) PURPOSE AND AMOUNT OF GRANTS.—(1) The purpose of this 
subpart is to provide a basic grant that (A) as determined under 
paragraph (2), will meet 60 percent of a student's cost of attendance 
(as defined in section 41 IF); and (B) in combination with reasonable 
parental or independent student contribution and supplemented by 
the programs authorized under subparts 2 and 3 of this part, will 
meet 75 percent of a student's cost of attendance (as defined in 
section 472), unless the institution determines that a greater 
amount of assistance would better serve the purposes of section 401. 
"(2)(A) The amount of the basic grant for a student eligible under 
this part shall be— 
"(i) $2,300 for academic year 1987-1988, 
"(ii) $2,500 for academic year 1988-1989, 
"(iii) $2,700 for academic year 1989-1990, 
"(iv) $2,900 for academic year 1990-1991, and 
"(v) $3,100 for academic year 1991-1992, 
less an amount equal to the amount determined to be the expected 
family contribution with respect to that student for that year. 
"(B) In any case where a student attends an institution of higher 
education on less than a full-time basis during any academic year, 
the amount of the basic grant to which that student is entitled shall 
be reduced in proportion to the degree to which that student is not 
so attending on a full-time basis, in accordance with a schedule of 
reductions established by the Secretary for the purposes of this 
division. Such schedule of reductions shall be established by regula-
tion and published in the Federal Register in accordance with 
section 482 of this Act. 
"(3) The amount of a basic grant to which a student is entitled 
under this subpart for any academic year shall not exceed 60 
Regulations. 
Federal 
Register, 
publication. 
100 STAT. 1310 
PUBLIC LAW 99-498—OCT. 17, 1986 
percent of the cost of attendance (as defined in section 411F) at the 
institution at which the student is in attendance for that year. 
"(4) No basic grant under this subpart shall exceed the difference 
between the expected family contribution for a student and the cost 
of attendance (as defined in section 41 IF) at the institution at which 
that student is in attendance. If, with respect to any student, it is 
determined that the amount of a basic grant plus the amount of the 
expected family contribution for that student exceeds the cost of 
attendance for that year, the amount of the basic grant shall be 
.&y:ii 31 
reduced until the combination of expected family contribution and 
the amount of the bfisic grant does not exceed the cost of attendance 
at such institution. 
"(5) No basic grant shall be awarded to a student under this 
subpart if the amount of that grant for that student as determined 
under this subsection for any academic year is less than $200. 
"(6) No basic grant shall be awarded under this subpart to any 
student who is attending on a less than half-time basis— 
"(A) from funds appropriated for fiscal years before fiscal year 
1989; 
"(B) from funds appropriated for fiscal year 1989 or 1990, 
unless the expected family contribution for such student is less 
than or equal to zero; or 
"(C) from funds appropriated for fiscal year 1991, unless the 
expected family contribution for such student is less than or 
equal to $200. 
"(7) No basic grant shall be awarded under this subpart from 
funds appropriated for fiscal year 1989 to students who are attend-
ing on a less than half-time basis if awarding basic grants to such 
students would cause basic grants to other students to be reduced 
pursuant to subsection (g). The provisions of this paragraph may not 
be waived unless enacted in express limitation of this paragraph. 
"(c) PERIOD OF ELIGIBILITY FOR GRANTS.—(1) The period during 
which a student may receive basic grants shall be the period re-
quired for the completion of the first undergraduate baccalaureate 
course of study being pursued by that student at the institution at 
which the student is in attendance except that— 
"(A) such period may not exceed the full-time equivalent of— 
-!-> 
"(i) 5 academic years in the case of an undergraduate 
degree or certificate program normally requiring 4 years or 
less; 
"(ii) 6 academic years in the case of an undergraduate 
degree or certificate program normally requiring more than 
4 years; 
"(B) any period during which the student is enrolled in a 
noncredit or remedial course of study as defined in paragraph 
(2) shall not be counted for the purpose of subparagraph (A); and 
"(C) an institution of higher education at which the student is 
in attendance may waive subparagraph (A) for undue hardship 
based on— 
"(i) the death of a relative of the student; 
"(ii) the personal injury or illness of the student; or 
"(iii) special circumstances as determined by the institu-
tion. 
"(2) Nothing in this section shall exclude from eligibility courses 
,. 
• 
of study which are noncredit or remedial in nature (including 
courses in English language instruction) which are determined by 
the institution to be necessary to help the student be prepared for 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1311 
the pursuit of a first undergraduate baccalaureate degree or certifi-
cate or, in the case of courses in English language instruction, to be 
necessary to enable the student to utilize already existing knowl-
edge, training, or skills. 
"(3) No student is entitled to receive Pell Grant payments concur-
rently from more than one institution or from the Secretary and an 
institution. 
"(d) APPLICATIONS FOR GRANTS.—(1) The Secretary shall from time 
to time set dates by which students shall file applications for basic 
grants under this subpart. 
"(2) Each student desiring a basic grant for any year shall file an 
application therefor containing such information and assurances as 
the Secretary may deem necessary to enable the Secretary to carry 
out the functions and responsibilities of this subpart. 
"(e) DISTRIBUTION OF GRANTS TO STUDENTS.—Payments under this 
section shall be made in accordance with regulations promulgated 
by the Secretary for such purpose, in such manner as will best 
accomplish the purpose of this section. Any disbursement allowed to 
be made by crediting the student's account shall be limited to 
tuition and fees and, in the case of institutionally owned housing, 
room and board. The student may elect to have the institution 
provide other such goods and services by crediting the student's 
account. 
"(D CALCULATION OF ELIGIBILITY.—(1) Each contractor processing 
applications for awards under this subpart (including a central 
processor, if any, designated by the Secretary) shall, in a timely 
manner, furnish to the student financial aid administrator (at each 
institution of higher education which a student awarded a basic 
grant under this subpart is attending) an estimate of the eligibility 
index for each such student. Each such student financial aid 
administrator shall— 
"(A) examine and assess the data used to calculate the eligi-
bility index of the student furnished pursuant to this subsec-
tion; 
"(B) recalculate the eligibility index of the student if there 
has been a change in circumstances of the student or in the data 
submitted; 
"(C) make the award to the student in the correct amount; 
and 
"(D) after making such award report the corrected data to 
such contractor and to a central processor (if any) designated by 
the Secretary for a confirmation of the correct computation of 
amount of the eligibility index for each such student. 
« 
"(2) Whenever a student receives an award under this subpart 
that, due to recalculation errors by the institution of higher edu-
cation, is in excess of the amount which the student is entitled to 
receive under this subpart, such institution of higher education 
shall pay to the Secretary the amount of such excess unless such 
excess can be resolved in a subsequent disbursement to the 
institution. 
"(3) Each contractor processing applications for awards under this Reports, 
subpart shall for each academic year after academic year 1986-1987 
prepare and submit a report to the Secretary on the correctness of 
the computations of amount of the eligibility index, and on the 
accuracy of the questions on the application form under this subpart 
for the previous academic year for which the contractor is respon-
sible. The Secretary shall transmit the report, together with the 
100 STAT. 1312 
PUBLIC LAW 99-498—OCT. 17, 1986 
comments and recommendations of the Secretary, to the Committee 
on Appropriations and the Committee on Labor and Human Re-
sources of the Senate and the Committee on Appropriations and the 
Committee on Education and Labor of the House of Representatives. 
"(g) ADJUSTMENTS FOR INSUFFICIENT APPROPRIATIONS.—(1) If, 
for 
any fiscal year, the funds appropriated for pa3mients under this 
subpart are insufficient to satisfy fully all entitlements, as cal-
culated under subsection (b), the amount paid with respect to each 
entitlement shall be— 
"(A) the full amount for any student whose expected family 
contribution is $200 or less, or 
"(B) a percentage of that entitlement, as determined in 
accordance with a schedule of reductions established by the 
Secretary for this purpose, for any student whose expected 
family contribution is more than $200. 
"(2) Any schedule established by the Secretary for the purpose of 
paragraph (1) of this subsection shall contain a single linear reduc-
tion formula in which the percentage reduction increases uniformly 
as the entitlement decreases, and shall provide that if an entitle-
ment is reduced to less than $100, no pajmient shall be made. 
"(h) USE OF EXCESS FUNDS.—(1) If, at the end of a fiscal year, the 
funds available for making payments under this subpart exceed the 
amount necessary to make the payments required under this sub-
part to eligible students by 15 percent or less, then all of the excess 
funds shall remain available for making pajnnents under this sub-
part during the next succeeding fiscal year. 
"(2) If, at the end of a fiscal year, the funds available for making 
payments under this subpart exceed the amount necessary to make 
the payments required under this subpart to eligible students by 
more than 15 percent, then all of such funds shall remain available 
for making such pajmients but payments may be made under this 
paragraph only with respect to entitlements for that fiscal year. 
"(i) NoNCONTRACTOR STATUS OF INSTITUTIONS.—Any institution of 
higher education which enters into an agreement with the Secretary 
to disburse to students attending that institution the amounts those 
students are eligible to receive under this subpart shall not be 
deemed, by virtue of such agreement, a contractor maintaining a 
system of records to accomplish a function of the Secretary. 
"FAMILY CONTRIBUTION SCHEDULE FOR PELL GRANTS; DATA ELEMENTS 
20 use I070a-i. 
"SEC. 411A. (a) GENERAL RULE FOR DETERMINATION OF EXPECTED 
FAMILY CONTRIBUTION.—(1) The expected family contribution— 
"(A) for a dependent student shall be determined in accord-
ance with section 41 IB, 
"(B) for an independent student with dependents other than a 
spouse shall be determined in accordance with section 41IC, and 
"(C) for a single independent student or a married independ-
ent student without other dependents shall be determined in 
accordance with section 41 ID. 
"(2) The following data elements are considered in determining 
the expected family contribution: 
"(A) the effective income of (i) the student and the student's 
spouse; and (ii) the student's parents, in the case of a dependent 
student; 
"(B) the number of family members in the household; 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1313 
"(C) the number of family members in the household who are 
enrolled, on at least a half-time basis, in a program of post-
secondary education; 
"(D) the assets of (i) the student and the student's spouse, and 
(ii) the student's parents, in the case of a dependent student; 
"(E) the marital status of the student; 
"(F) the unusual medical expenses of (i) the student's parents, 
in the case of a dependent student, or (ii) the student and the 
student's spouse, in the case of an independent student; 
"(G) the additional expenses incurred (i) in the case of a 
dependent student, when both parents of the student are em-
ployed or when the family is headed by a single parent who is 
employed, or (ii) in the case of an independent student, when 
both the student and the student's spouse are employed or when 
the employed student qualifies as a surviving spouse or as a 
head of a household under section 2 of the Internal Revenue 
Code of 1954; and 
26 USC 2. 
"(H) the tuition paid (i) in the case of a dependent student, by 
the student's parents for dependent children, other than the 
student, who are enrolled in an elementary or secondary school, 
(ii) in the case of an independent student, by the student or the 
student's spouse for dependent children who are so enrolled. 
"ELIGIBILITY DETERMINATION FOR DEPENDENT STUDENTS 
"SEC. 411B, (a) COMPUTATION OF STUDENT AID INDEX.—For each 
20 use i070a-2. 
dependent student, the student aid index is equal to the sum o
f
— 
"(1) the contribution from parents' income and assets, deter-
mined in accordance with subsection (b); 
"(2) the contribution from student's (and spouse's) income, 
determined in accordance with subsection (h); and 
"(3) the contribution from student's (and spouse's) assets, 
determined in accordance with subsection (1). 
"(b) CONTRIBUTION FROM PARENTS' INCOME AND ASSETS.—The par-
ents' contribution from income and assets is equal to the amount 
determined by— 
"(1) computing the standard contribution from parents' 
income, determined in accordance with subsection (c); 
"(2) adding the contribution from parents' assets, determined 
in accordance with subsection (g); and 
"(3) dividing the resultant amount by the number of family 
members who will be attending, on at least a half-time basis, a 
program of postsecondary education during the award period 
for which aid under this subpart is requested. 
"(c) STANDARD CONTRIBUTION FROM PARENTS' INCOME.—The stand-
ard contribution from parents' income is determined by calculating 
the effective family income in accordance with subsection (d); by 
deducting the total offsets against income, as determined in accord-
ance with subsection (e); and by assessing the results in accordance 
with subsection (f). 
"(d) DETERMINATION OF EFFECTIVE FAMILY INCOME.—The effective 
Taxes, 
family income is equal to— 
"(1) the sum of— 
"(A) the adjusted gross income of the parents as reported 
to the Internal Revenue Service for the year immediately 
/..ij 
preceding the award year, and income earned from work 
but not reported on a Federal income tax return; and 
100 STAT. 1314 
PUBLIC LAW 99-498—OCT. 17, 1986 
f 
"(B) the total annual amount of untaxed income and 
) c 
benefits, received by the parents in the year immediately 
preceding the award year; minus 
"(2) the sum o
f
— 
"(A) the amount of United States income tax paid or 
payable by the parents in the tax year preceding the award 
, *, 
year; and 
3
*
1 
"(B) an allowance for State and other taxes, as deter-
mined by multiplying the parents' total income (as deter-
mined under paragraph (D) by a percentage determined 
according to the following table: 
"Percentages for CTomputation of State and Other Tax Allowance 
And parents' total income is— 
9 
10 
11 
12 
13 
14 
8 
9 
10 
11 
12 
13 
If parents' State or territory of residence is— 
, 
.. 
gjr QQQ 
$15,000 
more 
then the percentage is— 
Alaska, Puerto Rico, Wyoming 
3 
2 
American Samoa, Guam, Louisiana, 
Nevada, 
Texas, Trust Territory, Virgin Islands 
4 
3 
Florida, South Dakota, Tennessee, New Mexico 
5 
4 
North Dakota, Washington 
6 
5 
Alabama, Arizona, Arkansas, Indiana, Mississippi, 
Missouri, Montana, New Hampshire, Oklaho-
ma, West Virginia 
7 
6 
Colorado, Connecticut, Georgia, Illinois, Kansas, 
Kentucky 
8 
7 
California, 
Delaware, Idaho, Iowa, 
Nebraska, 
North Carolina, Ohio, Pennsylvania, 
South 
Carolina, Utah, Vermont, Virginia, Canada, 
Mexico 
Maine, New Jersey 
District of Columbia, Hawaii, Maryland, Massa-
chusetts, Oregon, Rhode Island 
Michigan, Minnesota 
Wisconsin 
New York 
"(e) TOTAL OFFSETS AGAINST INCOME.—Total offsets 
against 
income are determined by deducting— 
"(1) a family size offset as determined by the following table: 
I 
"Family Size Offsets 
^ 
../, 
Family members 
Amount 
2 
$6,700 
3 
8,100 
4 
10,400 
5 
12,300 
6 
13,800 
7 or more 
13,800 plus $1,800 
for each member 
over 6 
"(2) an offset for unusual medical and dental expenses; 
"(3) an offset for employment expenses; and 
"(4) an offset for unreimbursed elementary and secondary 
school tuition and fees. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1315 
"(f) ASSESSMENT OF EFFECTIVE FAMILY INCOME.—(1) If the effective 
family income (as determined under subsection (d)) minus the total 
offsets (as determined under subsection (e)) is a negative amount, 
the standard contribution from the parents' income is zero. 
"(2) If such effective family income is a positive amount, the 
standard contribution from effective family income is determined in 
accordance with the following chart: 
"Effective family income 
Expected contribution 
$0 to $5,000 
11% of effective family income. 
$5,001 to $10,000 
$550, plus 13% of amount over $5,000. 
$10,001 to $15,000 
$1,200, 
plus 
18% of amount 
over 
$10,000. 
$15,001 and above 
$2,100, 
plus 
25% of amount 
over 
$15,000. 
"(g) CONTRIBUTION FROM PARENTS' ASSETS.—The standard con-
tribution from parents' assets is determined in accordance with 
paragraphs (1) through (7): 
"(1) If the parental assets include a principal place of resi-
dence, deduct $30,000 from the net value of the principal place 
of residence. If the subtraction required by the preceding sen-
tence of this paragraph produces a negative number, the 
amount determined under this paragraph shall be zero. 
"(2) If the parental assets include assets other than a prin-
cipal place of residence and other than farm and business 
assets, deduct $25,000 from the net value of those other assets. If 
the subtraction required by the preceding sentence of this para-
graph produces a negative number, the amount determined 
under this paragraph shall be zero. 
"(3) If the parental assets include farm or business assets, or 
both, deduct $80,000 in the case of business assets or $100,000 in 
the case of farm assets from the net value of the farm or 
business assets, or both. If the subtraction required by the 
preceding sentence of this paragraph produces a negative 
number, the amount determined under this paragraph shall be 
zero. 
"(4) If the sum of the farm and business deduction and the 
deductions in paragraphs (1) and (2) exceeds $110,000 in the case 
of business deductions or $130,000 in the case of farm deduc-
tions, the farm and business deduction shall be reduced by the 
amount that that sum exceeds $110,000, or $130,000, as the case 
may be. 
"(5)(A) The expected contribution from parental assets equals 
5 percent of the total of the amounts obtained under paragraphs 
(1), (2), and (3). 
"(B) If the calculation of effective family income required by 
subsection (d) produces a negative number, the expected con-
tribution from parental assets, calculated under this paragraph, 
shall be reduced by the amount of that negative effective family 
income. If the subtraction required by the preceding sentence of 
this subparagraph produces a negative number, the amount 
determined under this subparagraph shall be zero. 
"(6)(A) If the student's parents are separated, or divorced and 
not remarried, only the assets of the parent whose income is 
included in computing annual adjusted family income shall be 
considered. 
"(B) If that parent has remarried, or if the parent was a 
widow or widower who has remarried, and the parent's spouse's 
100 STAT. 1316 
PUBLIC LAW 99-498—OCT. 17, 1986 
income also is included in computing effective family income, 
the assets of that parent's spouse shall also be included. 
"(1) The Secretary shall promulgate special regulations to 
permit, in the computation of family contributions for the 
programs under this subpart for any academic year, the exclu-
sion from family income of any proceeds of a sale of farm or 
business assets of that family if such sale results from a vol-
untary or involuntary foreclosure, forfeiture, liquidation, or 
bankruptcy. 
"(h) CONTRIBUTION FROM STUDENT'S (AND SPOUSE'S) INCOME.—The 
contribution from student's (and spouse's) income is determined by 
calculating the student's (and spouse's) effective income, as deter-
mined in accordance with subsection (i), by deducting the total 
offsets against income, as determined in accordance with subsection 
(j), and by assessing the results in accordance with subsection (k). 
"(i) DETERMINATION OF STUDENT'S (AND SPOUSE'S) EFFECTIVE 
INCOME.—The effective income of the student (and spouse) is equal 
to— 
"(1) the sum of— 
"(A) the adjusted gross income of the student (and spouse) 
as reported to the Internal Revenue Service for the year 
immediately preceding the award year, or income earned 
from work other than amounts earned under part C of this 
title, but not reported on a Federal income tax return; and 
"(B) the total annual amount of untaxed income and 
benefits received by the student (and spouse) in the year 
' ' 
immediately preceding the award year; minus 
"(2) the amount of United States income tax paid or payable 
by the student (and spouse) in the tax year preceding the award 
year. 
"(j) TOTAL OFFSETS AGAINST STUDENT'S (AND SPOUSE'S) INCOME.— 
Total offsets against student's (and spouse's) income are determined 
by deducting— 
"(1) a dependent student offset of $3,500, or $5,100 in the case 
of a dependent student with a spouse; and 
"(2) if the parental effective family income (as determined 
under subsection (f)) is a negative amount, the amount, if any, 
by which the result of the subtraction performed under subsec-
tion (g)(5) is less than zero. 
"(k) ASSESSMENT OF STUDENT'S (AND SPOUSE'S) INCOME.—If the 
student's (and spouse's) effective income (as determined under 
subsection (i)) minus the total offsets (as determined under subsec-
tion (j)) is a negative amount, the contribution from student income 
is zero. If the student's (and spouse's) effective income is a positive 
amount, multiply it by 75 percent to determine the contribution 
from student's income. 
"(1) DETERMINATION OF CONTRIBUTION FROM STUDENT'S (AND 
SPOUSE'S) 
ASSETS.—The contribution from the student's (and 
spouse's) assets is determined by calculating the net assets of the 
student (and spouse) and multiplying the amount by 33 percent. 
"ELIGIBILITY DETERMINATION FOR INDEPENDENT STUDENTS WITH 
DEPENDENTS OTHER THAN A SPOUSE 
20 u s e 1070a-3. 
" S E C . 411C. 
(a) 
COMPUTATION 
OF 
S T U D E N T 
A I D 
I N D E X . — F o r 
independent students with dependents other than a spouse, the 
student aid index is equal to the amount determined by— 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1317 
"(1) computing the standard contribution from student's (and 
spouse's) income determined in accordance with subsection (b); 
"(2) adding the contribution from student's (and spouse's) 
assets determined in accordance with subsection (f); and 
"(3) dividing the resultant amount by the number of family 
members who will be attending, on at least a half-time basis, a 
program of postsecondary education during the award period 
for which aid under this subpart is requested. 
"(b) COMPUTING THE STANDARD CONTRIBUTION FROM STUDENT'S 
(AND SPOUSE'S) INCOME.—The standard contribution from the stu-
dent's (and spouse's) income is determined by calculating the effec-
tive family income in accordance with subsection (c); by deducting 
the total offsets against income, as determined in accordance with 
subsection (d); and by assessing the results in accordance with 
subsection (e). 
"(c) DETERMINATION OF EFFECTIVE FAMILY INCOME.—The effective 
Taxes, 
family income is equal to— 
"(1) the sum of— 
"(A) the adjusted gross income of the student (and spouse) 
.i;i,r r 
as reported to the Internal Revenue Service for the year 
immediately preceding the award year and income earned 
from work, other than amounts received under part C of 
this title, but not reported on a Federal income tax return; 
"(B) the total annual amount of untaxed income and 
i 
benefits which is received by the student (and spouse) in the 
year immediately preceding the award year; and 
"(C) one-half of the student's total veterans educational 
benefits, excluding Veterans' Administration contributory 
benefits, expected to be received during the award period; 
minus 
-^¥ ' "(2) the sum o
f
—
• 
"(A) the amount of United States income tax paid or 
payable by the student (and spouse) in the tax year preced-
ing the award year; and 
.., 
"(B) an allowance for State and other taxes as determined 
"•^ 
by multiplying the student's (and spouse's) total income (as 
determined under paragraph (1)) by a percentage deter-
\, 
mined according to the following table: 
"Percentages for Computation of State and Other Tax Allowance 
* " 
If student's State or territory of residence is— 
And student's (and spouse's) 
total income is— 
less than 
$15,000 or 
$15,000 
more 
then the percentage is— 
Alaska, Puerto Rico, Wyoming 
3 
2 
American Samoa, Guam, Louisiana, Nevada, 
Texas, Trust Territory, Virgin Islands 
4 
3 
Florida, South Dakota, Tennessee, New Mexico 
5 
4 
North Dakota, Washington 
6 
5 
Alabama, Arizona, Arkansas, Indiana, Mississippi, 
Missouri, Montana, New Hampshire, Oklaho-
ma, West Virginia 
7 
6 
Colorado, Connecticut, Georgia, Illinois, Kansas, 
Kentucky 
8 
7 
100 STAT. 1318 
PUBLIC LAW 99-498—OCT. 17, 1986 
"Percentages for Computation of State and Other Tax Allowance—Continued 
If student's State or territory of residence i s ^ 
And student's (and spouse's) 
total income is— 
less than 
$15,000 or 
$15,000 
more 
California, Delaware, Idaho, Iowa, Nebraska, 
North Carolina, Ohio, Pennsylvania, South 
Carolina, Utah, Vermont, Virginia, Canada, 
Mexico 
Maine, New Jersey 
District of Columbia, Hawaii, Maryland, Massa-
chusetts, Oregon, Rhode Island 
Michigan, Minnesota 
Wisconsin 
New York 
then the percentage is— 
9 
10 
1
1 
12 
13 
14 
8 
9 
10 
11 
12 
13 
"(d) TOTAL OFFSETS AGAINST INCOME.—Total offsets 
against 
income are determined by deducting— 
"(1) a family size offset equal to the amount specified in the 
following table: 
"Family Size Offsets 
Family members 
Amount 
2 
$6,700 
3 
8,100 
4 
10,400 
5 
12,300 
6 
13,800 
7 or more 
13,800 plus $1,800 
for each member 
.ii 
over 6 
"(2) an offset for unusual medical euid dental expenses; 
"(3) in the case of a married independent student when both 
the student and spouse were employed in the year for which 
income is reported, or in the case of a student who qualifies as a 
head of household as defined in section 2 of the Internal Reve-
26 use 2. 
nue Code of 1954, an offset for employment expenses; and 
"(4) an offset for unreimbursed elementary and secondary 
school tuition and fees. 
"(e) ASSESSMENT OF EFFECTIVE FAMILY INCOME.—(1) If the effective 
family income (as determined under subsection (c)) minus the total 
offsets (as determined under subsection (d)) is a negative amount, 
the standard contribution from the student's (and spouse's) income 
is zero. 
"(2) If such effective family income is a positive amount, the 
standard contribution from effective family income is determined in 
accordance with the following chart: 
"Effective family income 
Expected contribution 
$0 to $5,000 
11% of effective family income. 
$5,001 to $10,000 
$550, plus 13% of amount over $5,000. 
$10,001 to $15,000 
$1,200, plus 18% of amount 
over 
$10,000. 
$15,001 and above 
$2,100, plus 25% of amount 
over 
$15,000. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1319 
"(f) CONTRIBUTION FROM STUDENT'S (AND SPOUSE'S) ASSETS.—The 
standard contribution from student's (and spouse's) assets is deter-
mined in accordance with paragraphs (1) through (7): 
"(1) If the student's (and spouse's) assets include a principal 
place of residence, deduct $30,000 from the net value of the 
principal place of residence. If the subtraction required by the 
preceding sentence of this paragraph produces a negative 
number, the amount determined under this paragraph shall be 
. 
zero. 
"(2) If the student's (and spouse's) assets include assets other 
than a principal place of residence and other than farm and 
business assets, deduct $25,000 from the net value of those other 
assets. If the subtraction required by the preceding sentence of 
this paragraph produces a negative number, the amount deter-
mined under this paragraph shall be zero. 
"(3) If the student's (and spouse's) assets include farm or 
^ 
business assets, or both, deduct $80,000 in the case of business 
assets or $100,000 in the case of farm assets from the net value 
of the farm or business assets, or both. If the subtraction 
required by the preceding sentence of this paragraph produces a 
negative number, the amount determined under this paragraph 
shall be zero. 
"(4) If the sum of the farm and business deduction and the 
deductions in paragraphs (1) and (2) exceeds $110,000 in the case 
of business deductions or $130,000 in the case of farm deduc-
* 
tions, the farm and business deduction shall be reduced by the 
amount that that sum exceeds $110,000, or $130,000, as the case 
' • 
may be. 
''(5)(A) The expected contribution 
from 
student's (and 
U 
spouse's) assets equals 5 percent of the total of the amounts 
obtained under paragraphs (1), (2), and (3). 
"(B) If the calculation of effective family income required by 
subsection (c) produces a negative number, the expected con-
tribution from student's (and spouse's) assets, calculated under 
this paragraph, shall be reduced by the amount of that negative 
'^y effective family income. If the subtraction required by the 
preceding sentence of this subparagraph produces a negative 
number, the amount determined under this subparagraph shall 
be zero. 
"(6) If the married independent student with dependents is 
separated or divorced, only assets of the independent student 
shall be considered. 
"(7) The Secretary shall promulgate special regulations to 
permit, in the computation of family contributions for the 
programs under this subpart for any academic year, the exclu-
sion from family income of any proceeds of a sale of farm or 
business assets of that family if such sale results from a vol-
untary or involuntary foreclosure, forfeiture, liquidation, or 
bankruptcy. 
Agriculture 
and 
agricultuFEil 
commodities. 
ELIGIBILITY DETERMINATION FOR SINGLE INDEPENDENT STUDENTS OR 
FOR MARRIED INDEPENDENT STUDENTS WITHOUT OTHER DEPENDENTS 
"SEC. 411D. (a) COMPUTATION OF STUDENT AID INDEX.—For single 
independent students or married independent students without 
other dependents, the student aid index is equal to the amount 
determined by— 
20 u s e 1070a-4. 
100 STAT. 1320 
PUBLIC LAW 99-498—OCT. 17, 1986 
ri 
"(1) computing the standard contribution from student's (and 
^ spouse's) income determined in accordance with subsection (b); 
"(2) adding contribution from student's (and spouse's) assets 
determined in accordance with subsection (f); and 
"(3) dividing the resultant amount by the number of family 
members who will be attending, on at least a half-time basis, a 
program of postsecondary education during the award period 
for which aid under this subpart is requested. 
"(b) COMPUTING THE STANDARD CONTRIBUTION FROM STUDENT'S 
(AND SPOUSE'S) INCOME.—The standard contribution from the stu-
dent's (and spouse's) income is determined by calculating the effec-
tive family income in accordance with subsection (c); by deducting 
the total offsets against income, as determined in accordance with 
subsection (d); and by assessing the results in accordance with 
subsection (e). 
Taxes. 
"(c) DETERMINATION OF EFFECTIVE FAMILY INCOME.—The effective 
family income is equal to— 
eu! iw- '>vt! 
"(1) the sum o
f
—
• 
"(A) the adjusted gross income of the student (and spouse) 
as reported to the Internal Revenue Service for the year 
immediately preceding the award year and income earned 
p. , , from work, other than amounts received under part C of 
this title, but not reported on a Federal income tax return; 
"(B) the total annual amount of untaxed income and 
benefits which is received by the student (and spouse) in the 
year immediately preceding the award year; and 
"(C) one-half of the student's total veterans educational 
hn^; 
r benefits, excluding Veterans' Administration contributory 
3 iii . 
benefits, expected to be received during the award period; 
minus 
"(2) the sum of— 
"(A) the amount of United States income tax paid or 
payable by the student (and spouse) in the tax year preced-
ing the award year; and 
"(B) an allowance for State and other taxes as determined 
by multiplying the student's (and spouse's) total income (as 
determined under paragraph (1)), by a percentage deter-
mined according to the following table: 
"Percentages for Computation of State and Other Tax Allowance 
And student's (and spouse's) 
total income is— 
If student's State or territory of residence is— 
less than 
$15,000 or 
$15,000 
more 
then the percentage is— 
Alaska, Puerto Rico, Wyoming 
3 
2 
American Samoa, Guam, Louisiana, Nevada, 
Texas, Trust Territory, Virgin Islands 
4 
3 
Florida, South Dakota, Tennessee, New Mexico 
5 
4 
North Dakota, Washington 
6 
R,, 
Alabama, Arizona, Arkansas, Indiana, Mississippi, 
i 
>» , 
Missouri, Montana, New Hampshire, Oklaho-
ma, West Virginia 
7 
6 
Colorado, Connecticut, Georgia, Illinois, Kansas, 
Kentucky 
8 
" 
" 7 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1321 
"Percentages for Computation of State and Other Tax Allowance—Continued 
If student's State or territory of residence is— 
And student's (and spouse's) 
total income is— 
less than 
$15,000 or 
$15,000 
more 
California, Delaware, Idaho, Iowa, Nebraska, 
North Carolina, Ohio, Pennsylvania, South 
Carolina, Utah, Vermont, Virginia, Canada, 
Mexico 
Maine, New Jersey 
District of Columbia, Hawaii, Maryland, Massa-
chusetts, Oregon, Rhode Island 
Michigan, Minnesota 
, 
Wisconsin 
New York 
then the percentage is-
9 
10 
11 
12 
13 
14 
8 
9 
10 
11 
12 
13 
"(d) TOTAL OFFSETS AGAINST INCOME.—Total offsets 
against 
income are determined by deducting— 
"(1) a family size offset equal to the amount specified in the 
following table: 
"Family Size Offsets 
Family members 
Amount 
1 
$5,300 
2 
6,700 
"(2) an offset for unusual medical and dental expenses; and 
"(3) in the case of a married independent student when both 
the student and spouse were employed in the year for which 
income is reported, or in the case of a student who qualifies as a 
head of household as defined in section 2 of the Internal Reve-
nue Code of 1954, an offset for employment expenses. 
26 USC 2. 
"(e) ASSESSMENT OF EFFECTIVE FAMILY INCOME.—(1) If the effective 
family income (as determined under subsection (c)), minus the total 
offsets (as determined under subsection (d)) is a negative amount, 
the standard contribution from the student's (and spouse's) income 
is zero. 
"(2) If such effective family income is a positive amount, the 
standard contribution from student's (and spouse's) income is multi-
plied by 75 percent. 
"(f) CONTRIBUTION FROM STUDENT'S (AND SPOUSE'S) ASSETS.—(1) 
The asset contribution amount of an independent student and the 
student's spouse is equal to 5 percent of the sum of the amounts 
computed under paragraphs (3) and (4), reduced by the amount, if 
any, by which effective family income as computed under subsection 
(c) is less than zero. If the result of such subtraction is a negative 
amount, the family asset contribution amount is zero. 
"(2) The family asset contribution amount of a single independent 
student is equal to 33 percent of such student's net asset value, 
reduced by the amount, if any, by which effective family income as 
computed under subsection (c) is less than zero. If such value minus 
such amount is a negative amount, the family sisset contribution 
amount is zero. 
100 STAT. 1322 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(3) If the assets of an independent student with a spouse include 
a principal place of residence, deduct $30,000 from the net value of 
the principal place of residence. If the subtraction required by the 
preceding sentence of this parag[raph produces a negative number, 
the amount determined under this paragraph shall be zero. 
"(4)(A) If the assets of an independent student with a spouse 
include assets other than a principal place of residence and other 
than farm and business assets, deduct $25,000 from the net value of 
those other assets. If the subtraction required by the preceding 
sentence of this subparagraph produces a negative number, the 
amount determined under this subparagraph shall be zero. 
Agriculture and 
"(B)(i) If the assets of an independent student with a spouse 
agricultural 
include farm or business assets, or both, deduct $80,000 in the case 
commodities. 
of business assets or $100,000 in the case of farm assets from the net 
value of the farm or business assets, or both. If the subtraction 
required by the preceding sentence of this subparagraph produces a 
negative number, the amount determined under this subparagraph 
shall be zero. 
"(ii) If the sum of the farm and business deduction and the 
deductions in paragraphs (3) and (4)(A) exceeds $110,000 in the case 
of business deductions or $130,000 in the case of farm deductions, 
the farm and business deduction shall be reduced by the amount 
that that sum exceeds $110,000, or $130,000, as the case may be. 
"(5) The Secretary shall promulgate special regulations to permit, 
in the computation of family contributions for the programs under 
this subpart for any academic year, the exclusion from family 
income of any proceeds of a sale of farm or business assets of that 
family if such sale results from a voluntary or involuntary fore-
closure, forfeiture, liquidation, or bankruptcy. 
20 u s e 1070a-5. 
Federal 
Register, 
publication. 
REGULATIONS; UPDATED TABLES 
"SEC. 
411E. 
(a) 
AUTHORITY TO PRESCRIBE REGULATIONS RE-
STRICTED.—(1) Notwithstanding any other provision of law, the Sec-
retary shall not have the authority to prescribe regulations to carry 
out this subpart except— 
"(A) to prescribe updated tables under sections 41 IB through 
411D;or 
"(B) to propose modifications in the need analysis methodol-
ogy required by this subpart. 
"(2) Any regulation proposed by the Secretary that (A) updates 
tables in a manner that does not comply with subsection (b), or (B) 
that proposes modifications under paragraph (1)(B) of this subsec-
tion, shall not be effective unless approved by joint resolution of the 
Congress by May 1 following the date such regulations are published 
in the Federal Register in accordance with section 482, If the 
Congress fails to approve such regulations by such May 1, the 
Secretary shall publish in the Federal Register in accordance with 
section 482 updated tables for the applicable award year that are 
prescribed in accordance with subsection (b) of this section. 
"(b) PROVISIONS GOVERNING UPDATED TABLES.—(1)(A) Each of the 
amounts allowed as an offset for family size for dependent and 
independent students shall, for each academic year after academic 
year 1988-1989, be adjusted by the Secretary by increasing (or 
decreasing) the comparable amount for the preceding academic year 
by a percentage equal to the percentage increase (or decrease) in the 
Consumer Price Index for Wage Earners and Clerical Workers 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1323 
published by the Department of Labor, and rounded to the nearest 
$100. 
"(B) The Secretary shall publish in the Federal Register a revised 
table for an offset for family size in accordance with section 482. 
"(2)(A) The Secretary shall, for each academic year after academic 
year 1988-1989, publish in the Federal Register such revisions in 
offsets against income, asset determination, and assessment rates as 
are necessary to reflect the most recent and relevant data. 
"(B) The Secretary shall publish in the Federal Register the 
revised determinations required by subparagraph (A) in accordance 
with section 482. 
"DEFINITIONS; DETERMINATIONS 
"SEC. 41 IF. For the purpose of this subpart— 
"(1) The term 'annual adjusted family income' means the sum 
received in the year immediately preceding the award year, by 
the student's parents (in the case of a dependent student), or by 
the student and, if applicable, the student's spouse (in the case 
of an independent student), except excludable income under 
paragraph (9) of this subsection, from the following sources 
subject to the following rules: 
"(A) Adjusted gross income, as defined in section 62 of the 
Internal Revenue Code of 1954. 
"(B) Untaxed income and benefits, as defined in para-
graph (13) of this section. 
"(C) Income from one-half of any veteran's benefits ex-
pected to be paid to the student during the award period 
under chapters 34 and 35 of title 38 of the United States 
Code. 
"(D) Income for a student whose parents are divorced or 
separated is determined under the following procedures: 
"(i) Include only the income of the parent with whom 
the student resided for the greater portion of the 12-
month period preceding the date of the application, 
"(ii) If the preceding criterion does not apply, include 
only the income of the parent who provided the greater 
portion of the student's support for the 12-month period 
preceding the date of application. 
"(iii) If neither of the preceding criteria apply, in-
clude only the income of the parent who provided the 
greater support during the most recent calendar year 
for which parental support was provided. 
"(E) Income in the case of the death of any parent as 
follows: 
"(i) If either of the parents have died, the student 
shall include only the income of the surviving parent, 
"(ii) If both parents have died, the student shall not 
report any parental income. 
"(F) Income in the case of a parent whose income is taken 
into account under subparagraph (D) of this paragraph, or a 
parent who is a widow or widower and whose income is 
taken into account under clause (i) of this subparagraph, 
has remarried, under the following rule: The income of that 
parent's spouse shall be included in determining the stu-
dent's annual adjusted family income i
f
— 
Federal 
Register, 
publication. 
Federal 
Register, 
publication. 
20 u s e 1070a-6. 
26 u s e 62. 
38 u s e 1651 et. 
seq., 1700 et seq. 
sOVi 
100 STAT. 1324 
PUBLIC LAW 99-498—OCT. 17, 1986 
tHiY js, -n •'.'' 
"(i) the student's parent and the stepparent are mar-
ried as of the date of appHcation for the award year 
, ,. 
concerned; and 
. 
"(ii) the student is not an independent student. 
"(G)(i) Income in the case of a dislocated worker shall be 
the income for the year for which the determination is 
h
> . ,... 
. 
., made. 
"(ii) For the purpose of this subparagraph, a dislocated 
worker is a worker identified pursuant to title III of the Job 
29 use 1651. 
Training Partnership Act. 
"(2) The term 'assets' means cash on hand, including amount 
in checking and savings accounts, time deposits, money market 
funds, trusts, stocks, bonds, other securities, mutual funds, tax 
shelters, and the net value of real estate, income producing 
property, and business and farm assets. 
"(3) The term 'award year' is the period of time between July 
1 of the first year and June 30 of the following year. 
"(4) The term 'business assets' means property that is used in 
the operation of a trade or business, including real estate, 
inventories, buildings, machinery, and other equipment, pat-
- 
ents, franchise rights, and copyrights. 
"(5) The term 'cost of attendance' means— 
"(A) the student's tuition and uniform compulsory fees at 
the institution at which the student is in attendance for any 
' i 
award year, plus 
"(B)(i) an allowance for room and board costs, books, 
y « 
supplies, transportation, and miscellaneous expenses in-
curred by the student which shall not exceed $1,700 for a 
student without dependents residing at home with parents; 
"(ii) an allowance for room and board costs, books, sup-
plies, transportation, and miscellaneous expenses incurred 
by the student which shall not exceed $2,300 for all other 
students, subject to clause (iii); 
"(iii) an allowance for only books, supplies, and transpor-
tation (as determined by the institution) and dependent 
care expenses (in accordance with clause (iv)) for less than 
half-time students (as determined by the institution); 
"(iv) an allowance for child care which shall not exceed 
$1,000; and 
; 
"(v) an allowance for the costs of special services and 
~^"'' 
equipment required for attendance by the handicapped that 
are not provided by other assisting agencies; 
except that, if the meiximum award under this subpart is less 
than or greater than $2,300, then the dollar amounts specified 
' in clauses (i) and (ii) of subparagraph (B) of this paragraph shall 
be increased or decreased by an amount equal to the amount by 
which such meiximum award is greater than or less than $2,300, 
respectively. 
"(6) Except as otherwise provided, the term 'dependent of the 
student' means the parents of the student, the student's spouse, 
any of the student's dependent children, dependent children of 
the student's parents, including those children who are deemed 
to be dependent students when applying for aid under this title, 
and other persons who live with and receive more than one-half 
of their support from the parents and will continue to receive 
more than half of their support from the parents during the 
award year. 
--ii'^i.B.Jv-.. t«=-..).?:> .-•'.-•-,•.•- ....:...-««.....,.... 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1325 
"(7) Effective family income shall be determined on the basis 
Taxes. 
of the annual adjusted family income minus the Federal taxes 
and imputed State and other taxes paid or payable for the year 
that adjusted gross income is used in the calculation of the 
student's Pell Grant. 
"(8XA) The employment expense offset is determined as 
follows: 
1 
"(i) If both parents were employed in the year for which 
their income is reported and both have their incomes re-
•••' 
ported in determining the expected family contribution, 
such offset is equal to the lesser of $1,500 or 50 percent of 
the earned income (income earned by work) of the parent 
with the lesser earned income. 
"(ii) If a parent qualifies as a head of household as 
• 
defined in section 2 of the Internal Revenue Code of 1954, 26 USC 2. 
such offset is equal to the lesser of $1,500 or 50 percent of 
the parent's earned income. 
"(B) 'The employment expense offset in the case of an 
i 
independent student with dependents is determined as follows: 
"(i) If both the student and the student's spouse were 
employed in the year for which their income is reported 
and both have their incomes reported in determining the 
ii 
expected family contribution, such offset is equal to the 
lesser of $1,500 or 50 percent of the earned income (income 
earned by work) of the spouse with the lesser earned 
' 
• 
income. 
I'cii 
"(ii) If a student qualifies as a head of household as 
defined in section 2 of the Internal Revenue Code of 1954, 
such offset is equal to the lesser of $1,500 or 50 percent of 
the student's earned income. 
"(9)(A) The term 'excludable income' means the income de-
c 
scribed in subparagraphs (B), (C), and (D) of this paragraph 
which is excluded for the purpose of determining 'annual ad-
j 
justed family income' under paragraph (1). 
"(B) For a Native American student, the annual adjusted 
Indians, 
family income does not include the income received by the 
student, the student's spouse, or the student's parents under the 
Distribution of Judgment Funds Act (25 U.S.C. 1401, et seq.), 
the Alaska Native Claims Settlement Act (43 U.S.C. 1601, et 
seq.), or the Maine Indians Claims Settlement Act (25 U.S.C. 
1721, et seq.). 
"(C) In the case of a student who is divorced or separated, or 
- 
whose spouse has died, the spouse's income shall not be consid-
ered in determining the effective family income. 
"(D) The annual adjusted family income does not include any 
I 
student financial assistance except veterans' or Social Security 
benefits set forth in paragraph (15) of this subsection. 
"(lOXA) In determining family size in the case of a dependent 
student— 
"(i) if the parents are not divorced or separated, family 
members include the student's parents, and the dependents 
of the student's parents including the student; 
> 
"(ii) if the parents are divorced or separated, family 
members include the parent whose income is included in 
computing the effective family income and that parent's 
#fi 
dependents, including the student; and 
100 STAT. 1326 
PUBLIC LAW 99-498—OCT. 17, 1986 
H! 
"(iii) if the parents are divorced and the parent whose 
income is so included is remarried, or if the parent was a 
widow or widower who has remarried, family members also 
include, in addition to those individuals referred to in 
subparagraph (B), the new spouse and any dependents of 
; * 
the new spouse if that spouse's income is included in deter-
mining effective family income. 
"(B) In determining family size in the case of an independent 
student with dependents— 
"(i) family members include the student, the student's 
spouse, and the student's dependents; and 
"(ii) if the student is divorced or separated, family mem-
bers do not include the spouse (or ex-spouse), but do include 
the student and the student's dependents. 
5' i 
"(11) The term 'farm assets' means any property owned and 
used in the operation of a farm for profit, including real estate, 
livestock, livestock products, crops, farm machinery, and other 
equipment inventories. A farm is not considered to be operated 
for profit if crops or livestock are raised mainly for the use of 
the family, even if some income is derived from incidental sales. 
"(12)(A) The term 'independent', when used with respect to a 
student, means any individual who— 
"(i) is 24 years of age or older by December 31 of the 
award year; or 
"(ii) meets the requirements of subparagraph (B). 
"(B) Except as provided in subparagraph (C), an individual 
meets the requirements of this subparagraph if such individ-
ual— 
"(i) is an orphan or ward of the court; 
"(ii) is a veteran of the Armed Forces of the United 
States; 
"(iii) is a gradulate or professional student who declares 
V 
that he or she will not be claimed as a dependent for income 
tax purposes by his or her parents (or guardian) for the first 
calendar year of the award year; 
"(iv) is a married individual who declares that he or she 
will not be claimed as a dependent for income tax purposes 
by his or her parents (or guardian) for the first calendar 
year of the award year; 
"(v) has legal dependents other than a spouse; 
"(vi) is a single undergraduate student with no depend-
*
s 
ents who was not claimed as a dependent by his or her 
parents (or guardian) for income tax purposes for the 2 
calendar years preceding the award year and demonstrates 
to the student financial aid administrator total self-suffi-
ciency during the 2 calendar years preceding the award 
year in which the initial award will be granted by dem-
onstrating an annual total income of $4,000; or 
"(vii) is a student for whom a financial aid administrator 
makes a documented determination of independence by 
reason of other unusual circumstances. 
"(C) An individual may not be treated as an independent 
student pursuant to clauses (iii), (iv), and (vi) of subparagraph 
(B) if the financial aid administrator determines that such 
individual was treated as an independent student during the 
preceding award year, but was claimed as a dependent by any 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1327 
other individual (other than a spouse) for income tax purposes 
for the first calendar year of such award year. 
"(D) The financial aid administrator may certify an individ-
ual described in clause (iii), (iv), or (vi) of subparagraph (B) on 
the basis of a demonstration made by the individual, but no 
disbursal of an award may be made without documentation. 
"(13) The term 'net assets' means the current market value at 
the time of application of the assets included in the definition of 
'assets', minus the outstanding liabilities (indebtedness) against 
the £issets. 
"(14) The term 'unreimbursed elementary and secondary 
school tuition and fees' means the unreimbursed tuition and 
fees paid by the student's parents for each dependent other than 
the student, or by an independent student (and spouse) for 
• ^ -
dependents enrolled in elementary or secondary school, and 
may not exceed for each such dependent the national average 
per pupil instructional cost as published by the Center for 
Education Statistics using the most recent available data. 
"(15) The term 'untaxed income and benefits' means— 
"(A) investment income upon which no Federal income 
tax is required to be paid, such as the interest on municipal 
bonds; 
"(B) untaxed portions of capital gains; 
"(C) credit for Federal tax on special fuels; 
"(D) dividend exclusions and dividend reinvestment 
exclusions; 
"(E) foreign income exclusions; 
"(F) child support received; 
"(G) welfare benefits, including aid to families with 
dependent children under a State plan approved under part 
A of title IV of the Social Security Act, and aid to depend- 42 use 601. 
ent children; 
"(H) veterans benefits such as Death Pension and 
Dependency and Indemnity Compensation, except that vet-
erans educational benefits paid under chapters 34 and 35 of 
title 38 of the United States Code, Veterans' Administra- 
38 use 1651 et. 
tion contributory benefits, and Veterans' Administration 
s«9v 1700 et seq. 
vocational rehabilitation program benefits for postsecond-
ary education shall not be included; 
"(I) untaxed Social Security benefits, including supple-
mental security income which individuals receive for them-
selves and for children under age 18; 
"(J) interest on teix free bonds; 
"(K) housing, food, and other living allowances, excluding 
rent subsidies for low-income housing, paid to members of 
the military, the clergy, and others; and 
"(L) Job Training Partnership Act noneducational bene- 29 use 1501 
fits. 
note. 
"(16)(A) The term 'unusual medical and dental expenses' 
means an amount equal to the amount by which the sum of 
unreimbursed medical and dental expenses exceeds 20 percent 
of the effective family income of the parents. The expenses of 
both parents are included only if the income of both parents is 
included in determining effective family income. A stepparent's 
expenses are included only if the parent's income is included in 
determining effective family income. 
100 STAT. 1328 
PUBLIC LAW 99-498—OCT. 17, 1986 
•m, 
"(B) The term 'unusual medical and dental expenses', in the 
case of an independent student with dependents, means an 
• 
amount equal to the amount by which the sum of unreimbursed 
medical and dental expenses exceeds 20 percent of the effective 
family income of the independent student with dependents. The 
expenses of both the student and the student's spouse are 
included only if the incomes of both are included in determining 
effective family income. 
"SUBPART 2—SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANTS 
PURPOSE; APPROPRIATIONS AUTHORIZED 
20 use 1070b. 
"SEC. 413A. (a) PURPOSE OF SUBPART.—It is the purpose of this 
subpart to provide, through institutions of higher education, supple-
mental grants to assist in making available the benefits of post-
secondary education to qualified students who demonstrate finan-
cial need in accordance with the provisions of part F of this title. 
"(b) AUTHORIZATION OF APPROPRIATIONS.—(1) For the purpose of 
enabling the Secretary to make payments to institutions of higher 
education which have made agreements with the Secretary in 
accordance with section 413C(a), for use by such institutions for 
payments to undergraduate students of supplemental 
grants 
awarded to them under this subpart, there are authorized to be 
appropriated $490,000,000 for fiscal year 1987, and such sums as 
may be necessary for the 4 succeeding fiscal years. 
"(2) Sums appropriated pursuant to this subsection for any fiscal 
year shall be available for payments to institutions until the end of 
the second fiscal year succeeding the fiscal year for which they were 
appropriated. 
, £
, 
- 
"AMOUNT AND DURATION OF GRANTS 
20 use 1070b-l. 
"SEC. 413B. (a) AMOUNT OF GRANT.—(1) From the funds received 
by it for such purpose under this subpart, an institution which 
awards a supplemental grant to a student for an academic year 
under this subpart shall, for each year, pay to that student an 
amount not to exceed the lesser of (A) the amount determined by the 
institution, in accordance with the provisions of part F of this title, 
to be needed by that student to enable the student to pursue a 
course of study at the institution, or (B) $4,000. 
"(2) If the amount determined under paragraph (1) with respect to 
a student for any academic year is less than $100, no payment shall 
be made to that student for that year. For a student enrolled for less 
than a full academic year, the minimum payment required shall be 
reduced proportionately. 
"(b) PERIOD FOR RECEIPT OF GRANTS; CONTINUING ELIGIBILITY.—(1) 
The period during which a student may receive supplemental grants 
shall be the period required for the completion of the first under-
graduate baccalaureate course of study being pursued by that stu-
dent. 
"(2) A supplemental grant awarded under this subpart shall 
entitle the student (to whom it is awarded) to payments pursuant to 
such grant only if the student meets the requirements of section 484, 
except as provided in section 413C(c). 
"(c) DISTRIBUTION OP GRANT DURING ACADEMIC YEAR.—Nothing in 
this section shall be construed to prohibit an institution from 
making payments of varying amounts from a supplemental grant to 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1329 
a student during an academic year to cover costs for a period which 
are not appHcable to other periods of such academic year. 
"AGREEMENTS WITH INSTITUTIONS; SELECTION OF RECIPIENTS 
"SEC. 413C. (a) INSTITUTIONAL ELIGIBILITY.—Assistance may be 
20 use i070b-2. 
made available under this subpart only to an institution which— 
"(1) has, in accordance with section 487, an agreement with 
the Secretary applicable to this subpart; 
"(2) agrees that the Federal share of awards under this 
,. 
subpart will not exceed— 
"(A) 95 percent of such awards in fiscal year 1989, 
"(B) 90 percent of such awards in fiscal year 1990, and 
"(C) 85 percent of such awards in fiscal year 1991, 
except that the Federal share may be exceeded if the Secretary 
determines, pursuant to regulations establishing objective cri-
teria for such determinations, that a larger Federal share is 
required to further the purpose of this subpart; and 
"(3) agrees that the non-Federal share of awards made under 
this subpart shall be made from the institution's own resources, 
including— 
"(A) institutional grants and scholarships; 
"(B) tuition or fee waivers; 
"(C) State scholarships; and 
"(D) foundation or other charitable organization funds. 
"(b) ELIGIBIUTY FOR SELECTION.—Awards may be made under this 
subpart only to a student who— 
"(1) is an eligible student under section 484; and 
"(2) makes application at a time and in a manner consistent 
with the requirements of the Secretary and that institution. 
"(c) SELECTION OF INDIVIDUALS AND DETERMINATION OF AMOUNT OF 
AWARDS.—(1) From among individuals who are eligible for supple-
mental grants for each fiscal year, the institution shall, in accord-
ance with the agreement under section 487, and within the amount 
allocated to the institution for that purpose for that year under 
section 413D, select individuals who are to be awarded such grants 
and determine, in accordance with section 413B, the amounts to be 
paid to them. 
"(2)(A) In carrying out paragraph (1) of this subsection, each 
institution of higher education shall, in the agreement made under 
section 487, assure that the selection procedures— 
"(i) will be designed to award supplemental grants under this 
subpart, first, to students with exceptional need, and 
"(ii) will give a priority for supplemental grants under this 
subpart to students who receive Pell Grants and meet the 
requirements of section 484. 
"(B) For the purpose of subparagraph (A), the term 'students with 
exceptional need' means students with the lowest expected family 
contributions at the institution. 
"(d) USE OF FUNDS FOR LESS-THAN-FULL-TIME STUDENTS.—If the 
institution's allocation under this subpart is directly or indirectly 
based in part on the financial need demonstrated by students 
attending the institution less than full time, a reasonable proportion 
of the institution's allocation shall be made available to such 
students. 
"(e) 
USE AND TRANSFER OF FUNDS FOR ADMINISTRATIVE EX-
PENSES.—An agreement entered into pursuant to this section shall 
100 STAT. 1330 
PUBLIC LAW 99-498—OCT. 17, 1986 
provide that funds granted to an institution of higher education may 
be used only to make payments to students participating in a grant 
program authorized under this subpart, except that an institution 
may use a portion of the sums allocated to it under this subpart to 
meet administrative expenses in accordance with section 489 of this 
"-' ^"' 
title, and may transfer such funds in accordance with the provisions 
of section 488. 
"ALLOCATION OF FUNDS 
20 use i070b-3. 
"SEC. 413D. (a) ALLOCATION BASED ON PREVIOUS ALLOCATION.—(1) 
From the amount appropriated pursuant to section 413A(b) for each 
fiscal year, the Secretary shall first allocate to each eligible institu-
tion an amount equal to 100 percent of the amount such institution 
received and used under this subpart for fiscal year 1985. 
"(2)(A) From the amount so appropriated, the Secretary shall next 
allocate to each eligible institution that began participation in the 
program under this subpart after fiscal year 1985 but is not a first or 
second time participant, an amount equal to the greater of— 
"(i) $5,000; or 
"(ii) 90 percent of the amount received and used under this 
subpart for the first year it participated in the program. 
"(B) From the amount so appropriated, the Secretary shall next 
allocate to each eligible institution that began participation in the 
program under this subpart after fiscal year 1985 and is a first or 
second time participant, an amount equal to the greatest o
f
— 
"(i) $5,000; 
"(ii) an amount equal to (I) 90 percent of the amount received 
and used under this subpart in the second preceding fiscal year 
by eligible institutions offering comparable programs of instruc-
tion, divided by (II) the number of students enrolled at such 
comparable institutions in such fiscal year, multiplied by (III) 
the number of students enrolled at the applicant institution in 
such fiscal year; or 
"(iii) 90 percent of the institution's allocation under this part 
for the preceding fiscal year. 
"(C) Notwithstanding subparagraphs (A) and (B) of this para-
graph, the Secretary shall allocate to each eligible institution 
which— 
"(i) was a first-time participant in the program in fiscal year 
1986 or any subsequent fiscal year, and 
"(ii) received a larger amount under this subsection in the 
second year of participation, 
an amount equal to 90 percent of the amount it received under this 
subsection in its second year of participation. 
"(3)(A) If the amount appropriated for any fiscal year is less than 
the amount required to be allocated to all institutions under para-
graph (1) of this subsection, then the amount of the allocation to 
each such institution shall be ratably reduced. 
"(B) If the amount appropriated for any fiscal year is more than 
the amount required to be allocated to all institutions under para-
graph (1) but less than the amount required to be allocated to all 
institutions under paragraph (2), then— 
"(i) the Secretary shall allot the amount required to be allo-
cated to all institutions under paragraph (1), and 
"(ii) the amount of the allocation to each institution under 
paragraph (2) shall be ratably reduced. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1331 
"(C) If additional amounts are appropriated for any such fiscal 
year, such reduced amounts shall be increased on the same basis as 
they were reduced (until the amount allocated equals the amount 
required to be allocated under paragraphs (1) and (2) of this sub-
section). 
"(b) ALLOCATION OF EXCESS BASED ON PRO RATA SHARE.—From 
one-quarter of the remainder of the amount appropriated pursuant 
to section 413A(b) for any fiscal year (after making the allocations 
required by subsection (a)), the Secretary shall allocate to each 
eligible institution an amount which bears the same ratio to such 
one-quarter as the amount the eligible institution receives for such 
fiscal year under subsection (a) bears to the amount all such institu-
tions receive under such subsection (a). 
"(c) ALLOCATION OF EXCESS BASED ON FAIR SHARE.—(1) From 
three-quarters of the remainder of the amount appropriated pursu-
ant to section 413A(b) for each year (after making the allocations 
required by subsection (a)), the Secretary shall allocate to each 
eligible institution which has an excess eligible amount an amount 
which bears the same ratio to such remainder as such excess eligible 
amount bears to the sum of the excess eligible amounts of all such 
eligible institutions (having such excess eligible amounts), 
"(2) For any eligible institution, the excess eligible amount is the 
amount, if any, by which— 
"(A)(i) the amount of that institution's need (as determined 
under subsection (d)), divided by (ii) the sum of the need of all 
institutions (as so determined), multiplied by (iii) the amount 
appropriated pursuant to section 413A(b) of the fiscal year; 
exceeds 
"(B) the amount required to be allocated to that institution 
under subsection (a). 
"(d) DETERMINATION OF INSTITUTION'S NEED.—(1) The amount of 
an institution's need is equal to— 
"(A) the sum of the need of the institution's eligible under-
graduate students; minus 
"(B) the sum of grant aid received by students under subparts 
1 and 3 of this part. 
"(2) To determine the need of an institution's eligible undergradu-
ate students, the Secretary shall— 
"(A) establish various income categories for dependent and 
independent undergraduate students; 
"(B) establish an expected family contribution for each 
income category of dependent and independent undergraduate 
students, determined on the basis of the average expected 
family contribution (computed in accordance with part F of this 
title) of a representative sample within each income category 
for the second preceding fiscal year; 
"(C) compute 75 percent of the average cost of attendance for 
all undergraduate students; 
"(D) multiply the number of eligible dependent students in 
each income category by the lesser of— 
"(i) 75 percent of the average cost of attendance for all 
undergraduate students determined under subparagraph 
•-u i 
(C); or 
"(ii) the average cost of attendance for all undergraduate 
students minus the expected family contribution deter-
mined under subparagraph (B) for that income category, 
71-19A 0 - 8 9 - 9 
: QL. 3 Part2 
100 STAT. 1332 
PUBLIC LAW 99-498—OCT. 17, 1986 
except that the amount computed by such subtraction shall 
not be less than zero; 
"(E) add the amounts determined under subparagraph (D) for 
each income category of dependent students; 
"(F) multiply the number of eligible independent students in 
each income category by the lesser of— 
"(i) 75 percent of the average cost of attendance for all 
undergraduate students determined under subparagraph 
(C); or 
"(ii) the average cost of attendance for all undergraduate 
students minus the expected family contribution deter-
mined under subparagraph (B) for that income category, 
except that the amount computed by such subtraction for 
any income category shall not be less than zero; 
"(G) add the amounts determined under subparagraph (F) for 
each income category of independent students; and 
"(H) add the amounts determined under subparagraphs (E) 
and (G). 
"(3)(A) For purposes of paragraph (2), the term 'average cost of 
attendance' means the average of the attendance costs for under-
graduate students and for graduate and professional students, which 
shall include (i) tuition and fees determined in accordance with 
subparagraph (B), (ii) standard living expenses determined in 
accordance with subparagraph (C), and (iii) books and supplies 
determined in accordance with subparagraph (D), 
"(B) The average undergraduate and graduate and professional 
tuition and fees described in subparagraph (A)(i) shall be computed 
on the basis of information reported by the institution to the 
Secretary, which shall include (i) total revenue received by the 
institution from undergraduate and graduate 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. 
"(C) The standard living expense described in subparagraph (A)(ii) 
is equal to three-fourths in the Pell Grant family size offset for a 
single independent student. 
"(D) The allowance for books and supplies described in subpara-
graph (A)(iii) is equal to $450. 
"(e) REALLOCATION OP EXCESS ALLOCATIONS.—If an institution re-
; 
turns to the Secretary any portion of the sums allocated to such 
institution under this section for any fiscal year the Secretary shall, 
in accordance with regulations, reallocate such excess to other 
institutions. 
"(f) FILING DEADUNES.—The Secretary shall, from time to time, 
set dates before which institutions must file applications for alloca-
tions under this part. 
"SUBPART 3—GRANTS TO STATES FOR STATE STUDENT INCENTIVES 
"PURPOSE; APPROPRIATIONS AUTHORIZED 
" 
-
20 use 1070c. 
"SEC. 415A. (a) PURPOSE OF SUBPART.—It is the purpose of this 
subpart to make incentive grants available to the States to assist 
them in providing grants to eligible students attending institutions 
of higher education and grants to eligible students for campus-based 
community service work learning study. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1333 
"(b) AUTHORIZATION OF APPROPRIATIONS; AVAILABILITY.—(1) There 
are authorized to be appropriated $85,000,000 for fiscal year 1987, 
and such sums as may be necessary for the 4 succeeding fiscal years. 
"(2) Sums appropriated pursuant to paragraph (1) for any fiscal 
year shall remain available for payments to States under this 
subpart until the end of the fiscal year succeeding the fiscal year for 
which such sums were appropriated. 
"ALLOTMENT AMONG STATES 
"SEC. 415B. (a) ALLOTMENT BASED ON NUMBER OF ELIGIBLE STU- 
20 use I070c-i. 
DENTS IN ATTENDANCE.—(1) From the sums appropriated pursuant to 
section 415A(b)(l) for any fiscal year, the Secretary shall allot to 
each State an amount which bears the same ratio to such sums as 
the number of students who are deemed eligible in such State for 
participation in the grant program authorized by this subpart bears 
to the total number of such students in all the States, except that no 
State shall receive less than the State received for fiscal year 1979. 
"(2) For the purpose of this subsection, the number of students 
who are deemed eligible in a State for participation in the grant 
program authorized by this subpart, and the number of such stu-
dents in all the States, shall be determined for the most recent year 
for which satisfactory data are available. 
"(b) REALLOTMENT.—The amount of any State's allotment under 
subsection (a) for any fiscal year which the Secretary determines 
will not be required for such fiscal year for the State student grant 
incentive program of that State shall be available for reallotment 
from time to time, on such dates during such year as the Secretary 
may fix, to other States in proportion to the original allotments to 
such States under such part for such year, but with such propor-
tionate amount for any of such States being reduced to the extent it 
exceeds the sum the Secretary estimates such State needs and will 
be able to use for such year for carrying out the State plan. The total 
of such reductions shall be similarly reallotted among the States 
whose proportionate amounts were not so reduced. Any amount 
reallotted to a State under this part during a year from funds 
appropriated pursuant to section 415A(b)(l) shall be deemed part of 
its allotment under subsection (a) for such year. 
"(c) ALLOTMENTS SUBJECT TO CONTINUING COMPLIANCE.—The Sec-
retary shall make payments for continuing incentive grants only to 
States which continue to meet the requirements of section 415C0t)). 
APPLICATIONS FOR STATE STUDENT INCENTIVE GRANT PROGRAMS 
"SEC. 415C. 
(a) SUBMISSION AND CONTENTS OF APPLICATIONS.—A 
20 use i070c-2. 
State which desires to obtain a payment under this subpart for any 
fiscal year shall submit annually an application therefor through 
the State agency administering its program under this subpart as of 
July 1, 1985, unless the Governor of that State so designates, in 
writing, a different agency to administer the program. The applica-
tion shall contain such information as may be required by, or 
pursuant to, regulation for the purpose of enabling the Secretary to 
make the determinations required under this subpart. 
"(b) PAYMENT OF FEDERAL SHARE OF GRANTS MADE BY QUAUFIED 
PROGRAM.—From a State's allotment under this subpart for any 
fiscal year the Secretary is authorized to make payments to such 
100 STAT. 1334 
PUBLIC LAW 99-498—OCT. 17, 1986 
State for paying up to 50 percent of the amount of student grants 
pursuant to a State program which— 
"(1) is administered by a single State agency; 
"(2) provides that such grants will be in amounts not in excess 
of $2,500 per academic year (A) for attendance on a full-time 
basis at an institution of higher education, and (B) for campus-
based community service work learning study jobs; 
"(3) provides that— 
"(A) not more than 20 percent of the allotment to the 
State for each fiscal year may be used for the purpose 
5 
: 
described in paragraph (2)(B); 
"(B) grants for the campus-based community work learn-
ing study jobs may be made only to students who are 
u 
otherwise eligible for assistance under this subpart; and 
"(C) grants for such jobs be made in accordance with the 
provisions of section 443(b)(1); 
"(4) provides for the selection of recipients of such grants or of 
such State work-study jobs on the basis of substantial financial 
need determined annually on the basis of criteria established by 
the State and approved by the Secretary; 
"(5) provides that, effective with respect to any academic year 
beginning on or after October 1, 1978, all nonprofit institutions 
of higher education in the State are eligible to participate in the 
State program, except in any State in which participation of 
nonprofit institutions of higher education is in violation of the 
constitution of the State or in any State in which participation 
of nonprofit institutions of higher education is in violation of a 
statute of the State which was enacted prior to October 1, 1978; 
"(6) provides for the payment of the non-Federal portion of 
such grants or of such work-study jobs from funds supplied by 
such State which represent an additional expenditure for such 
year by such State for grants or work-study jobs for students 
attending institutions of higher education over the amount 
expended by such State for such grants or work-study jobs, if 
any, during the second fiscal year preceding the fiscal year in 
which such State initially received funds under this subpart; 
"(7) provides that, if the institution's allocation under this 
subpart is based in part on the financial need demonstrated by 
students attending the institution less than full time, a reason-
able proportion of the institution's allocation shall be made 
available to such students; 
"(8) provides for State expenditures under such program of an 
amount not less than the average annual aggregate expendi-
tures for the preceding three fiscal years or the average annual 
expenditure per full-time equivalent student for such years; 
"(9) provides (A) for such fiscal control and fund accounting 
procedures as may be necessary to assure proper disbursement 
of and accounting for Federal funds paid to the State agency 
under this subpart, and (B) for the making of such reports, in 
such form and containing such information, as may be reason-
ably necessary to enable the Secretary to perform his functions 
under this subpart; and 
"(10) for any academic year beginning after June 30, 1987, 
provides the non-Federal share of the amount of student grants 
or work-study jobs under this subpart through a direct appro-
priation of State funds for the program under this subpart. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1335 
"(c) 
RESERVATION 
AND 
DISBURSEMENT OF 
ALLOTMENTS AND 
REALLOTMENTS.—Upon Kis approval of any application for a pay-
ment under this subpart, the Secretary shall reserve from the 
applicable allotment (including any applicable reallotment) avail-
able therefor, the amount of such payment, which (subject to the 
limits of such allotment or reallotment) shall be equal to the Federal 
share of the cost of the students' incentive grants or work-study jobs 
covered by such application. The Secretary shall pay such reserved 
amount, in advance or by way of reimbursement, and in such 
installments as the Secretary may determine. The Secretary may 
amend the reservation of any amount under this section, either 
upon approval of an amendment of the application or upon revision 
of the estimated cost of the student grants or work-study jobs with 
respect to which such reservation was made. If the Secretary ap-
proves an upward revision of such estimated cost, the Secretary may 
reserve the Federal share of the added cost only from the applicable 
allotment (or reallotment) available at the time of such approval. 
"ADMINISTRATION OF STATE PROGRAMS; JUDICIAL REVIEW 
"SEC. 
415D. 
(a) DISAPPROVAL OF APPLICATIONS; SUSPENSION OF 
20 USC i070c-3. 
ELIGIBILITY.—(1) The Secretary shall not finally disapprove any 
application for a State program submitted under section 415C, or 
any modification thereof, without first affording the State agency 
submitting the program reasonable notice and opportunity for a 
hearing. 
"(2) Whenever the Secretary, after reasonable notice and oppor-
tunity for hearing to the State agency administering a State pro- 
,, 
gram approved under this subpart, finds— 
"(A) that the State program has been so changed that it no 
longer complies with the provisions of this subpart, or 
"(B) that in the administration of the program there is a 
failure to comply substantially with any such provisions, 
the Secretary shall notify such State agency that the State will not 
be regarded as eligible to participate in the program under this 
subpart until he is satisfied that there is no longer any such failure 
to comply. 
"(b) REVIEW OF DECISIONS.—(1) If any State is dissatisfied with the 
Secretary's final action with respect to the approval of its State 
program submitted under this subpart or with his final action under 
subsection (a), such State may appeal to the United States court of 
appeals for the circuit in which such State is located. The summons 
and notice of appeal may be served at any place in the United 
States. The Commissioner shall forthwith certify and file in the 
court the transcript of the proceedings and the record on which he 
based his action. 
"(2) The findings of fact by the Secretary, if supported by substan-
tial evidence, shall be conclusive; but the court, for good cause 
shown, may remand the case to the Secretary to take further 
evidence, and the Secretary may thereupon make new or modified 
findings of fact and may modify his previous action, and shall certify 
to the court the transcript and record of further proceedings. Such 
new or modified findings of fact shall likewise be conclusive if 
supported by substantial evidence. 
"(3) The court shall have jurisdiction to affirm the action of the 
Secretary or to set it aside, in whole or in part. The judgment of the 
court shall be subject to review by the Supreme Court of the United 
100 STAT. 1336 
PUBLIC LAW 99-498—OCT. 17, 1986 
20 u s e 1070C-4. 
)3li 
States upon certiorari or certification as provided in title 28, United 
States Code, section 1254. 
"DEFINITION 
^ 
"SEC. 415E. For the purpose of this subpart, the term 'community 
service' means services, including direct service, planning, and ap-
plied research which are identified by an institution of higher 
education, through formal or informal consultation with local non-
profit, governmental, and community-based organizations, and 
which— 
"(1) are designed to improve the quality of life for community 
residents, particularly low-income individuals, or to solve 
particular problems related to the needs of such residents, 
including but not limited to, such fields as health care, child 
care, education, literary training, welfare, social services, public 
safety, crime prevention and control, transportation, recreation, 
housing and neighborhood improvement, rural development, 
and community improvement; and 
"(2) provide participating 
students 
with 
work-learning 
opportunities related to their educational or vocational pro-
grams or goals. 
,;.• 
; . 
r 
"SUBPART 4—SPECIAL PROGRAMS FOR STUDENTS FROM 
DISADVANTAGED BACKGROUNDS 
PROGRAM AUTHORITY; AUTHORIZATION OF APPROPRIATIONS 
20 use I070d. 
"SEC. 417A. (a) GRANTS AND CONTRACTS AUTHORIZED.—The Sec-
retary shall, in accordance with the provisions of this subpart, carry 
out a program of making grants and contracts designed to identify 
qualified individuals from disadvantaged backgrounds, to prepare 
them for a program of postsecondary education, to provide support 
services for such students who are pursuing programs of postsecond-
ary education, and to train individuals serving or preparing for 
service in programs and projects so designed. 
"(b) EUGIBLE GRANT AND CONTRACT RECIPIENTS.—(1) For the pur-
poses described in subsection (a), the Secretary is authorized, with-
out regard to section 3709 of the Revised Statutes (41 U.S.C. 5), to 
make grants to, and contracts with, institutions of higher education, 
public and private agencies and organizations, and, in exceptional 
circumstances, secondary schools for planning, developing, or carry-
ing out one or more of the services assisted under this subpart. 
"(2) In making grants and contracts under this subpart, the 
Secretary shall consider the prior experience of service delivery 
under the particular program for which funds are sought by each 
applicant. For fiscal years after 1985, the level of consideration 
given to prior experience shall not vary from the level of consider-
ation given this factor for fiscal year 1985. 
"(c) 
AUTHORIZATION OF APPROPRIATIONS.—For the 
purpose 
of 
making grants and contracts under this subpart, there are au-
thorized to be appropriated $205,000,000 for fiscal year 1987, and 
such sums as may be necessary for the 4 succeeding fiscal years. 
"(d) DEFINITIONS.—For the purpose of this subpart— 
\ > 
"(1) the term 'first generation college student' means— 
"(A) an individual both of whose parents did not complete 
! 
a baccalaureate degree; or 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1337 
"(B) in the case of any individual who regularly resided 
with and received support from only one parent, an individ-
ual whose only such parent did not complete a bacca-
laureate degree; 
"(2) the term 'low-income individual' means an individual 
from a family whose taxable income for the preceding year did 
not exceed 150 percent of an amount equal to the poverty level 
determined by using criteria of poverty established by the 
Bureau of the Census; and 
"(3) no veteran shall be deemed ineligible to participate in 
Veterans. 
'' 
any program under this subpart by reason of such individual's 
age who— 
"(A) served on active duty for a period of more than 180 
b 
days, any part of which occurred after January 31, 1955, 
and was discharged or released therefrom under conditions 
other than dishonorable; or 
"(B) served on active duty after January 31, 1955, and 
was discharged or released therefrom because of a service 
' 
connected disability. 
"TALENT SEARCH 
"SEC. 417B. (a) PROGRAM AUTHORITY.—The Secretary shall carry 
20 use I070d-i. 
out a program to be known as talent search which shall be de-
signed— 
"(1) to identify qualified youths with potential for education 
at the postsecondary level and to encourage such youths to 
complete secondary school and to undertake a program of post-
secondary education; 
"(2) to publicize the availability of student financial assist-
ance available to persons who pursue a program of postsecond-
ary education; and 
"(3) to encourage persons who have not completed programs 
of education at the secondary or postsecondary level, but who 
have the ability to complete such programs, to reenter such 
programs. 
"(b) TUTORIAL SERVICES.—A talent search project assisted under 
this subpart may include, in addition to the services described in 
paragraphs (1), (2), and (3) of subsection (a), tutorial services for 
youths being encouraged to undertake or reenter programs of post-
secondary education if such tutorial services are not otherwise 
available to such youths through a project assisted under this 
subpart. 
"(c) REQUIREMENTS FOR APPROVAL OF APPLICATIONS.—In approving 
applications for talent search projects under this subpart for any 
fiscal year the Secretary shall— 
"(1) require an assurance that not less than two-thirds of the 
Disadvantaged 
youths participating in the project proposed to be carried out 
persons, 
under any application be low-income individuals who are first 
generation college students; 
"(2) require that such participants be persons who either have 
completed 6 years of elementary education or are at least 12 
years of age but not more than 27 years of age, unless the 
imposition of any such limitation with respect to any person 
would defeat the purposes of this section or the purposes of 
section 417E; 
100 STAT. 1338 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(3) require an assurance that individuals participating in the 
project proposed in the application do not have access to serv-
i 
ices from another project funded under this section or under 
section 417E; and 
r 
"(4) require assurances that the project will be located in a 
>/ setting accessible to the persons proposed to be served by the 
project. 
•
^ 
V 
"UPWARD BOUND 
' 
20 use 
"SEC. 417C. (a) PROGRAM AUTHORITY.—The Secretary shall carry 
I070d-la. 
out a program to be known as upward bound which shall be 
designed to generate skills and motivation necessary for success in 
education beyond high school. 
"(b) PERMISSIBLE SERVICES.—Any upward bound project assisted 
under the subpart may provide services such as— 
"(1) instruction in reading, writing, study skills, mathematics, 
and other subjects necessary for success beyond high school; 
"(2) personal counseling; 
"(3) academic advice and assistance in high school course 
selection; 
"(4) tutorial services; 
"(5) exposure to cultural events, academic programs, and 
I "^i «lHi 
other activities not usually available to disadvantaged youth; 
"(6) activities designed to acquaint youths participating in the 
project with the range of career options available to them; 
' 
"(7) instruction designed to prepare youths participating in 
the project for careers in which persons from disadvantaged 
backgrounds are particularly underrepresented; 
"(8) on-campus residential programs; and 
' 
"(9) programs and activities as described in paragraphs (1) 
I
S through (8) which are specially designed for students of limited 
English proficiency. 
"(c) REQUIREMENTS FOR APPROVAL OF APPLICATIONS.—In approving 
applications for upward bound projects under this subpart for any 
fiscal year the Secretary shall— 
"(1) require an assurance that not less than two-thirds of the 
youths participating in the project proposed to be carried out 
under any application be low-income individuals who are first 
generation college students; 
Disadvantaged 
"(2) require an assurance that the remaining youths partici-
persons. 
pating in the project proposed to be carried out under any 
- 
application be either low-income individuals or be first genera-
tion college students; 
"(3) require that there be a determination by the institution, 
with respect to each participant in such project, that the partici-
pant has a need for academic support in order to pursue success-
* irf.. 
' fully a program of education beyond high school; and 
* * 
' 
"(4) require that such participants be persons who have com-
pleted 8 years of elementary education and are at least 13 years 
of age but not more than 19 years of age, unless the imposition 
of any such limitation would defeat the purposes of this section. 
"(d) MAXIMUM STIPENDS.—Youths participating in a project pro-
posed to be carried out under any application may be paid stipends 
not in excess of $60 per month during June, July, and August, and 
not in excess of $40 per month during the remaining period of the 
year. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1339 
" S T U D E N T SUPPORT SERVICES 
"SEC. 417D. (a) PROGRAM AUTHORITY.—The Secretary shall carry 
out a program to be known as student support services (hereinafter 
referred to as 'student support services'). 
"(b) PERMISSIBLE SERVICES.—A support services project assisted 
under this subpart may provide services such as— 
"(1) instruction in reading, writing, study skills, mathematics, 
and other subjects necessary for success beyond high school; 
"(2) personal counseling; 
"(3) academic advice and assistance in course selection; 
"(4) tutorial services and counseling and peer counseling; 
"(5) exposure to cultural events and academic programs not 
usually available to disadvantaged students; 
"(6) activities designed to acquaint students participating in 
the project with the range of career options available to them; 
"(7) activities designed to assist students participating in the 
project in securing admission and financial assistance for enroll-
, 
ment in graduate and professional programs; 
g, 
"(8) activities designed to assist students currently enrolled in 
2-year institutions in securing admission and financial assist-
ance for enrollment in a four-year program of postsecondary 
education; and 
"(9) programs and activities as described in paragraphs (1) 
:; 
through (8) which are specially designed for students of limited 
English proficiency. 
"(c) REQUIREMENTS FOR APPROVAL OF APPLICATIONS.—In approving 
applications for support services projects under this subpart for any 
fiscal year the Secretary shall— 
"(1) require an assurance that not less than two-thirds of the 
persons participating in the project proposed to be carried out 
under any application— 
H 
"(A) be physically handicapped, or 
t 
"(B) be low-income individuals who are first generation 
college students; 
;3 
"(2) require an assurance that the remaining students partici-
hf 
pating in the project proposed to be carried out under any 
application either be low-income individuals, first generation 
college students, or physically handicapped; 
"(3) require that there be a determination by the institution, 
with respect to each participant in such project, that the partici-
pant has a need for academic support in order to pursue success-
fully a program of education beyond high school; 
"(4) require that such participants be enrolled or accepted for 
'^ 
enrollment at the institution which is the recipient of the grant 
or contract; and 
"(5) require an assurance from the institution which is the 
recipient of the grant or contract that each student enrolled in 
the project will receive sufficient financial assistance to meet 
that student's full financial need. 
"(d) POST-BACCALAUREATE ACHIEVEMENT PROGRAM AUTHORITY.— 
(1) The Secretary shall carry out a program to be known as the 
"Post-Baccalaureate Achievement Program". 
"(2) A post-baccalaureate achievement project assisted under this 
subsection may provide services such as— 
20 use 
1070d-lb. 
Disadvantaged 
persons. 
100 STAT. 1340 
PUBLIC LAW 99-498—OCT. 17, 1986 
b-^ 
"(A) opportunities for research or other scholarly activities at 
the institution or at graduate centers designed to provide stu-
dents with effective preparation for doctoral study; 
"(B) summer internships; 
"(C) seminars and other educational activities designed to 
prepare students for doctoral study; 
"(D) tutoring; 
"(E) academic counseling; and 
"(F) activities designed to assist students participating in the 
project in securing admission to and financial assistance for 
enrollment in graduate programs. 
"(2) In approving applications for post-baccalaureate achievement 
projects assisted under this subsection for any fiscal year, the 
Secretary shall require— 
Disadvantaged 
"(A) an assurance that not less than two-thirds of the individ-
P^J^o^s. 
uals participating in the project proposed to be carried out 
under any application be low-income individuals who are first-
generation college students; 
"(B) an assurance that the remaining persons participating in 
^^' the project proposed to be carried out be from a group that is 
underrepresented in graduate education; 
"(C) an assurance that participants be enrolled in a degree 
program at an eligible institution in accordance with the provi-
sions of section 487; and 
:>'i:. "(D) an assurance that participants in summer research 
internships have completed their sophomore year in post-
secondary education. 
"(4) In addition to such other selection criteria as may be pre-
scribed by regulations, the Secretary shall consider in making 
awards to institutions under this subsection— 
"(A) the quality of research and other scholarly activities in 
which students will be involved; 
"(B) the level of faculty involvement in the project and the 
b 
\- i . V- 
' 
description of the research in which students will be involved; 
and 
"(C) the institution's plan for identifying and recruiting 
participants including students enrolled in projects authorized 
under this subsection. 
"(5) Students participating in research under a post-baccalaureate 
achievement project may receive stipends not to exceed $2,400 per 
annum. 
"(6) No funds shall be allocated to projects authorized under this 
subsection until projects authorized by the other provisions of this 
subpart are allocated a minimum of $168,800,000, and in no case 
shall funds allocated to projects authorized under this subsection 
exceed— 
"(A) $1,000,000 in the fiscal year 1988, 
V 
"(B) $2,000,000 in the fiscal year 1989, 
" . 
"(C) $3,000,000 in the fiscal year 1990, and 
"(D) $4,000,000 in the fiscal year 1991. 
EDUCATIONAL OPPORTUNITY CENTERS 
20 use 
1070d-lc. 
"SEC. 417E. 
(a) PROGRAM AUTHORITY; SERVICES PROVIDED.—The 
Secretary shall carry out a program to be known as educational 
opportunity centers which shall be designed— 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1341 
:
< 
"(1) to provide information with respect to financial and 
academic assistance available for individuals desiring to pursue 
a program of postsecondary education; and 
"(2) to provide assistance to such persons in applying for 
admission to institutions at which a program of postsecondary 
education is offered, including preparing necessary applications 
for use by admissions and financial aid officers. 
"(b) TUTORIAL AND COUNSEUNG SERVICES,—An educational oppor-
tunity center assisted under this subpart may provide, in addition to 
the services described in paragraphs (1) and (2) of subsection (a), 
tutorial and counseling services for persons participating in the 
project if such tutorial and counseling services are not otherwise 
available through a project assisted under this subpart. 
"(c) REQUIREMENTS FOR APPROVAL OF APPLICATIONS.—In approving 
applications for educational opportunity centers under this subpart 
for any fiscal year the Secretary shall— 
"(1) require an assurance that not less than two-thirds of the 
persons participating in the project proposed to be carried out 
under any application be low-income individuals who are first 
generation college students; 
,j 
"(2) require that such participants be persons who are at least 
nineteen years of age, unless the imposition of such limitation 
with respect to any person would defeat the purposes of this 
section or the purposes of section 417B; and 
"(3) require an assurance that individuals participating in the 
project proposed in the application do not have access to serv-
ices from another project funded under this section or under 
section 417B. 
STAFF DEVELOPMENT ACTIVITIES 
"SEC. 417F. For the purpose of improving the operation of the 
programs and projects authorized by this subpart, the Secretary is 
authorized to make grants to institutions of higher education and 
other public and private nonprofit institutions and organizations to 
provide training for staff and leadership personnel employed in, or 
preparing for employment in, such programs and projects. Such 
training shall include conferences, internships, seminars, work-
shops, and the publication of manuals designed to improve the 
operation of such programs and projects and shall be carried out in 
the various regions of the Nation in order to ensure that the 
training opportunities are appropriate to meet the needs in the local 
areas being served by such programs and projects. Grants for the 
purposes of this section shall be made only after consultation with 
regional and State professional associations of persons having spe-
cial knowledge with respect to the needs and problems of such 
programs and projects. 
20 use 
1070d-ld. 
'SUBPART 5—SPECIAL PROGRAMS FOR STUDENTS WHOSE FAMILIES 
ARE ENGAGED IN MIGRANT AND SEASONAL FARMWORK 
MAINTENANCE AND EXPANSION OF EXISTING PROGRAMS 
"SEC. 418A. (a) PROGRAM AUTHORITY.—The Secretary shall main-
tain and expand existing secondary and postsecondary high school 
equivalency program and college assistance migrant program 
projects located at institutions of higher education or at private 
20 u s e 1070d-2. 
100 STAT. 1342 
PUBLIC LAW 99-498—OCT. 17, 1986 
nonprofit organizations working in cooperation with institutions of 
higher education. 
"(b) 
SERVICES PROVIDED BY HIGH SCHOOL EQUIVALENCY PRO-
GRAM.—The services authorized by this subpart for the high school 
equivalency program include— 
"(1) recruitment services to reach persons who are 17 years of 
age and over, who themselves or whose parents have spent a 
minimum of 75 days during the past 24 months in migrant and 
seasonal farmwork, and who lack a high school diploma or its 
equivalent; 
"(2) educational services which provide instruction designed 
to help students obtain a general education diploma which 
meets the guidelines established by the State in which the 
project is located for high school equivalency; 
"(3) supportive services which include the following: 
"(A) personal, vocational, and academic counseling; 
"(B) placement services designed to place students in a 
• 
university, college, or junior college program, or in military 
-'* 
service or career positions; and 
"(C) health services; 
^' 
"(4) information concerning and assistance in obtaining avail-
able student financial aid; 
"(5) weekly stipends for high school equivalency program 
participants; 
"(6) housing for those enrolled in residential programs; 
"(7) exposure to cultural events, academic programs, and 
* other educational and cultural activities usually not available 
to migrant youth; and 
"(8) other essential supportive services, as needed to ensure 
the success of eligible students. 
"(c) SERVICES PROVIDED BY COLLEGE ASSISTANCE MIGRANT PRO-
. r '. , GRAM.—Services authorized by this subpart for the college assist-
ance migrant program include— 
"(1) outreach and recruitment services to reach persons who 
themselves or whose parents have spent a minimum of 75 days 
during the past 24 months in migrant and seasonal farmwork, 
! 
and who meet the minimum qualifications for attendance at a 
college or university; 
i, 
^
^ 
"(2) supportive and instructional services which include: 
"(A) personal, academic, and career counseling as an 
,; 
ongoing part of the program; 
.' 
"(B) tutoring and academic skill building instruction and 
s 
assistance; 
"(C) assistance with special admissions; 
t 
>.,; 
"(D) health services; and 
"(E) other services as necessary to assist students in 
completing program requirements; 
"(3) assistance in obtaining student financial aid which 
includes, but is not limited to: 
"(A) stipends; 
"(B) scholarships; 
- ,;>< v 
"(C) student travel; 
4
; 
"(D) career oriented work study; 
»., 
"(E) books and supplies; 
"(F) tuition and fees; 
1; 
"(G) room and board; and 
.
< 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1343 
"(H) other assistance necessary to assist students in 
completing their first year of college; 
"(4) housing support for students living in institutional facili-
ties and commuting students; 
"(5) exposure to cultural events, academic programs, and 
other activities not usually available to migrant youth; and 
"(6) other support services as necessary to ensure the success 
of eligible students. 
"(d) MANAGEMENT PLAN REQUIRED.—Each project application 
shall include a management plan which contains assurances that 
staff shall have a demonstrated knowledge and be sensitive to the 
unique characteristics and needs of the migrant and seasonal farm-
worker population, and provisions for: 
"(1) staff in-service training; 
"(2) training and technical assistance; 
"(3) staff travel; 
"(4) student travel; 
"(5) interagency coordination; and 
"(6) an evaluation plan. 
"(e) THREE-YEAR GRANT PERIOD; CONSIDERATION OF PRIOR EXPERI-
ENCE.—Except under extraordinary circumstances, the Secretary 
shall award grants for a 3-year period. For the purpose of making 
grants under this subpart, the Secretary shall consider the prior 
experience of service delivery under the particular project for which 
funds are sought by each applicant. Such prior experience shall be 
awarded the same level of consideration given this factor for 
applicants for programs authorized by subpart 4 of this part in 
accordance with section 417A(b)(2). 
"(f) MINIMUM ALLOCATIONS.—The Secretary shall not allocate an 
amount less than— 
"(1) $150,000 for each project under the high school equiva-
lency program, and 
"(2) $150,000 for each project under the college assistance 
migrant program. 
"(g) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to 
be appropriated for this part $9,000,000 for fiscal year 1987, and 
such sums as may be necessary for the 4 succeeding fiscal years. 
"SUBPART 6—ROBERT C. BYRD HONORS SCHOLARSHIP PROGRAM 
"STATEMENT OF PURPOSE 
"SEC. 419A. It is the purpose of this subpart to establish a Robert 
C. Byrd Honors Scholarship Program to promote student excellence 
and achievement and to recognize exceptionally able students who 
show promise of continued excellence. 
20 use 
1070d-31. 
DEFINITION 
'SEC. 419B. For the purpose of this subpart— 
"(1) the term 'secondary school' has the same meaning given 
that term under section 198(a)(7) of the Elementary and Second-
ary Education Act of 1965; and 
"(2) the term 'State' means each of the several States, the 
District of Columbia, and the Commonwealth of Puerto Rico. 
20 use 
1070d-32. 
20 use 2854. 
100 STAT. 1344 
PUBLIC LAW 99-498—OCT. 17,1986 
State and local 
governments. 
20 use 
1070d-33. 
'- 
• 
- 
• 
SCHOLARSHIPS AUTHORIZED 
"SEC. 
419C. 
(a) 
PROGRAM 
AUTHORITY.—The 
Secretary 
is 
authorized, in accordance with the provisions of this subpart, to 
make grants to States to enable the States to award scholarships to 
individuals who have demonstrated outstanding academic achieve-
ment and who show promise of continued academic achievement. 
"(b) PERIOD OF AWARD.—Scholarships under this section shall be 
awarded for a period of one academic year for the first year of study 
at an institution of higher education. 
"(c) USE AT ANY INSTITUTION PERMITTED.—A student awarded a 
scholarship under this subpart may attend any institution of higher 
education. 
"(d) BYRD SCHOLARS.—Individuals awarded scholarships under 
this subpart shall be known as 'Byrd Scholars'. 
ALLOCATION AMONG STATES 
20 use 
"SEC. 419D. From the sums appropriated pursuant to section 419K 
1070d-34. 
for any fiscal year, the Secretary shall allocate to each State having 
an agreement under section 419E— 
"(1) $1,500 multiplied by the number of individuals in the 
State eligible for scholarships pursuant to section 419G(b), plus 
"(2) $10,000, plus 5 percent of the amount to which a State is 
eligible under paragraph (1) of this section. 
20 use 
1070d-35. 
20 use 
1070d-36. 
AGREEMENTS 
"SEC. 419E. The Secretary shall enter into an agreement with 
each State desiring to participate in the scholarship program 
authorized by this subpart. Each such agreement shall include 
provisions designed to assure that— 
"(1) the State educational agency will administer the scholar-
ship program authorized by this subpart in the State; 
- 
"(2) the State educational agency will comply with the eligi-
bility and selection provisions of this subpart; 
"(3) the State educational agency will conduct outreach activi-
> ties to publicize the availability of scholarships under this 
E subpart to all eligible students in the State, with particular 
emphasis on activities designed to assure that students from 
low-income and moderate-income families have access to the 
information on the opportunity for full participation in the 
scholarship program authorized by this subpart; 
"(4) the State educational agency will pay to each individual 
in the State who is awarded a scholarship under this subpart 
$1,500 at an awards ceremony in accordance with section 4191; 
and 
"(5) the State educational agency will use the amount of the 
allocation described in paragraph (2) of section 419D for 
administrative expenses, including the conduct of the awards 
ceremony required by section 4191. 
» . \~ a 
•'iP'-
EUGIBIUTY OF SCHOLARS 
"SEC. 419F. (a) HIGH SCHOOL GRADUATION OR EQUIVALENT AND 
ADMISSION TO INSTITUTION REQUIRED.—Each student awarded a 
scholarship under this subpart shall be a graduate of a public or 
private secondary school or have the equivalent of a certificate of 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1345 
graduation as recognized by the State in which the student resides 
and must have been admitted for enrollment at an institution of 
higher education. 
"(b) SELECTION BASED ON PROMISE OF ACADEMIC ACHIEVEMENT.— 
Each student awarded a scholarship under this subpart must dem-
onstrate outstanding academic achievement and show promise of 
continued academic achievement. 
"SELECTION OF SCHOLARS 
"SEC. 419G. (a) ESTABLISHMENT OF CRITERIA.—The State edu-
cational agency is authorized to establish the criteria for the selec-
tion of scholars under this subpart. 
"(b) ADOPTION OF PROCEDURES.—The State educational agency 
shall adopt selection procedures which are designed to assure that 
10 individuals will be selected from among residents of each congres-
sional district in a State (and in the case of the District of Columbia 
and the Commonwealth of Puerto Rico not to exceed 10 individuals 
will be selected in such District or Commonwealth). 
"(c) CONSULTATION REQUIREMENT.—In carrying out its responsibil-
ities under subsections (a) and (b), the State educational agency shall 
consult with school administrators school boards, teachers, coun-
selors, and parents. 
State and local 
governments. 
20 use 
1070d-37. 
STIPENDS AND SCHOLARSHIP CONDITIONS 
"SEC. 419H. (a) AMOUNT OF AWARD.—Each student awarded a 
scholarship under this subpart shall receive a stipend of $1,500 for 
the academic year of study for which the scholarship is awarded. 
"(b) USE OF AWARD.—The State educational agency shall establish 
procedures to assure that a scholar awarded a scholarship under 
this subpart pursues a course of study at an institution of higher 
education. 
"AWARDS CEREMONY 
"SEC. 4191. (a) LOCAL CEREMONY.—The State educational agency 
shall make arrangements to award scholarships under this subpart 
at a place in each State which is convenient to the individuals 
selected to receive such scholarships. To the extent possible, the 
award shall be made by Members of the Senate and Members of the 
House of Representatives (by the Delegate in the case of the District 
of Columbia and the Resident Commissioner in the case of the 
Commonwealth of Puerto Rico) who represent the State, Common-
wealth, or District, as the case may be, from which the individuals 
come. 
"
O
t
>
) TIMING OF SELECTION.—The selection process shall be com-
pleted, and the awards made prior to the end of each secondary 
academic year. 
" C O N S T R U C T I O N O F N E E D S PROVISIONS 
"SEC. 419J. Nothing in this subpart, or any other Act, shall be 
construed to permit the receipt of a scholarship under this subpart 
to be counted for any needs test in connection with the awarding of 
any grant or the making of any loan under this Act or any other 
provision of Federal law relating to educational assistance. 
20 use 
1070d-38. 
state and local 
governments. 
20 use 
1070d-39. 
20 use 
1070d-40. 
100 STAT. 1346 
PUBLIC LAW 99-498—OCT. 17, 1986 
20 use 
1070d-41. 
AUTHORIZATION OF APPROPRIATIONS 
"SEC. 419K. There are authorized to be appropriated for this 
subpart $8,000,000 for fiscal year 1987, and such sums as may be 
necessary for the 4 succeeding fiscal years. 
"SUBPART 7—ASSISTANCE TO INSTITUTIONS OF HIGHER EDUCATION 
Grants. 
20 u s e 1070e. 
PAYMENTS TO INSTITUTIONS OF HIGHER EDUCATION 
"SEC. 420. (a) COST OF EDUCATION PAYMENTS.—Each institution of 
higher education shall be entitled for each fiscal year to a cost-of-
education payment in accordance with the provisions of this section. 
"(b) COMPUTATION OF AMOUNT.—(1) The amount of the cost-of-
education payment to which an institution shall be entitled under 
this section for a fiscal year shall be, subject to subsection (d), the 
amount determined under paragraph (2)(A) plus the amount deter-
mined under paragraph (2)(B). 
"(2)(A)(i) The Secretary shall determine the amount to which an 
institution is entitled under this subparagraph on the basis of the 
total number of undergraduate students who are in attendance at 
the institution and the number of students who are also recipients of 
basic grants under subpart 1, in accordance with the following table: 
"If the total number of students in at-
tendance is— 
The amount of the grant is— 
Not over 1,000 
$500 for each recipient. 
Over 1,000 but not over 2,500 
$500 for each of 100 recipients; plus $400 
for each recipient in excess of 100. 
Over 2,500 but not over 5,000 
$500 for each of 100 recipients; plus $400 
for each of 150 recipients in excess of 
100; plus $300 for each recipient in 
excess of 250. 
Over 5,000 but not over 10.000 
$500 for each 100 recipients; plus $400 
for each of 150 recipients in excess of 
100; plus $300 for each of 250 recipi-
ents in excess of 250; plus $200 for 
each recipient in excess of 500. 
Over 10,000 
$500 for each of the 100 recipients; plus 
$400 for each of 150 recipients in 
excess of 100; plus $300 for each of 250 
recipients in excess of 250; plus $200 
for each of 500 recipients in excess of 
500; plus $100 for each recipient in 
excess of 1,000. 
"(ii) In any case where a recipient of a basic grant under subpart 1 
attends an institution receiving a cost-of-education payment under 
this subpart on less than a full-time basis, the amount determined 
under this subparagraph with respect to the student shall be re-
duced in proportion to the degree to which that student is not 
attending on a full-time basis. 
"(iii) If during any period of any fiscal year the funds available for 
making payments on the basis of entitlements established under 
this subparagraph are insufficient to satisfy fully all such entitle-
ments, the amount paid with respect to each such entitlement shall 
be ratably reduced. When additional funds become available for 
such purpose, the amount of payment from such additional funds 
shall be in proportion to the degree to which each such entitlement 
is unsatisfied by the payments made under the first sentence of this 
division. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1347 
"(B)(i) The Secretary shall determine with respect to each institu-
tion an amount equal to the appropriate percent (specified on the 
table below) of the aggregate of— 
"(I) supplemental educational opportunity grants under sub-
part 2; 
"(11) work-study payments under part C; and 
"(III) loans to students under part E; 
made for such year to students who are in attendance at such 
institution. The Secretary shall determine such amounts on the 
basis of percentages of such aggregate, and the number of students 
in attendance at institutions during the most recent academic year 
ending prior to such fiscal year, in accordance with the following 
table: 
"If the number of students 
The percentage of 
in attendance at the 
such aggregate 
institution is— 
shall be— 
Not over 1,000 
50 percent. 
Over 1,000 but not over 3,000 
46 percent. 
Over 3,000 but not over 10,000 
42 percent. 
Over 10,000 
38 percent. 
"(ii) If during any period of any fiscal year the funds available for 
making payments on the basis of entitlements established under 
this subparagraph are insufficient to satisfy fully all such entitle-
ments, the amount paid with respect to each such entitlement shall 
be ratably reduced. When additional funds become available for 
such purpose, the amount of payment from such additional funds 
shall be in proportion to the degree to which each such entitlement 
is unsatisfied by the payments made under the first sentence of this 
division. 
"(3)(A) In determining the number of students in attendance at 
institutions of higher education under this subsection, the Secretary 
shall compute the full-time equivalent of part-time students. 
"(B) The Secretary shall make a separate determination of the 
number of students in attendance at an institution of higher edu-
cation and the number of recipients of basic grants at any such 
institution at each branch or separate campus of that institution 
located in a different community from the principal campus of that 
-u -
institution pursuant to criteria established by him. 
"(c) APPLICATIONS; CONTENTS AND MANNER OF FILING.—An institu-
tion of higher education may receive a cost-of-education payment in 
accordance with this section only upon application therefor. An 
application under this section shall be submitted at such time or 
times, in such manner, and containing such information as the 
Secretary determines necessary to carry out his functions under this 
title, and shall— 
"(1) set forth such policies, assurances, and procedures as will 
ensure that— 
"(A) the funds received by the institution under this 
section will be used solely to defray instructional expenses 
in academically related programs of the applicant; 
"(B) the funds received by the institution under this 
section will not be used for a school or department of 
divinity or for any religious worship or sectarian activity; 
"(C) the applicant will expend, during the academic year 
for which a payment is sought, for all academically related 
^ 
programs of the institution, an amount equal to at least the 
average amount so expended during the 3 years preceding 
the year for which the grant is sought; and 
100 STAT. 1348 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(D) the applicant will submit to the Secretary such 
reports as the Secretary may require by regulation; and 
"(2) contain such other statement of policies, assurances, and 
procedures as the Secretary may require by regulation in order 
to protect the financial interests of the United States. 
"(d) APPORTIONMENT OF APPROPRIATIONS.—(1) The Secretary shall 
pay to each institution of higher education for each fiscal year the 
amount to which it is entitled under this section. 
"(2) Of the total sums appropriated to make payments on the basis 
of entitlements established under this section and to make pay-
ments under part D of title IX— 
"(A) 45 percent shall be available for making payments on the 
basis of entitlements established under paragraph (2)(A) of 
subsection (a); 
"(B) 45 percent shall be available for making payments on the 
basis of entitlements established under paragraph (2)(B) of 
subsection (a); and 
"(C) 10 percent shall be available for making payments under 
part D of title IX. 
"(3) No payments on the basis of entitlements established under 
paragraph (2)(A) of subsection (a) may be made during any fiscal 
year for which the appropriations for making grants under subpart 
1 does not equal at least 50 percent of the appropriation necessary 
for satisfying the total of all entitlements established under such 
subpart. In no event shall, during any fiscal year, the aggregate of 
the payments to which this paragraph applies exceed that percent-
age of the total entitlements established under such paragraph 
(2)(A) which equals the percentage of the total entitlements estab-
lished under subpart 1 which are satisfied by appropriations for 
such purpose for that fiscal year. 
"(e) LIMITATION ON APPROPRIATIONS.—No funds are authorized to 
be appropriated for this subpart for fiscal year 1987. 
"VETERANS EDUCATION OUTREACH PROGRAM 
20 use I070e-i. 
"SEC. 420A. (a) AUTHORIZATION OF APPROPRIATIONS.—There are 
authorized to be appropriated to carry out the provisions of this 
section $5,000,000 for fiscal year 1987, and such sums as may be 
necessary for the 4 succeeding fiscal years. 
"(b) SIZE AND DURATION OF AWARDS.—(1) The minimum grant that 
may be awarded to an institution under this section is $1,000, which 
may remain available for expenditure over a period not to exceed 2 
academic years. 
"(2) The amount of the payment to which any institution shall be 
entitled under this section for any fiscal year shall be— 
"(A) $300 for each person who is a veteran receiving voca-
tional rehabilitation under chapter 31 of title 38, United States 
38 use 1500 et 
Code, or a veteran receiving educational assistance under chap-
If use 1651 et 
^®^ ^^ ®
^ such title 38, and who is in attendance at such 
seq. 
institution as an undergraduate student during such year; 
"(B) $150 for each person who is in attendance at such 
institution as an undergraduate student during such year and 
who has been the recipient of educational assistance under 
38 use 1690 et 
subchapter V or VI of chapter 34 of such title 38, or who has a 
seq., 1695 et seq. 
scrvice-connected disability as defined in section 101(16) of such 
38 use 101. 
title 38, or who is disabled, as determined in accordance with 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1349 
regulations promulgated by the Secretary after consultation 
with the Administrator of Veterans' Affairs; and 
"(C) $100 for each person who is in attendance at such institu-
tion as an undergraduate student during such year and who has 
received an honorable discharge from military service but who 
is no longer eligible to or does not receive educational benefits 
under chapter 31 or chapter 34 of title 38 of the United States 
Code. 
38 u s e 1500 et 
"(3) In any case where a person on behalf of whom a payment is «
«
9
v 1651 et seq. 
made under this section attends an institution on less than a full-
time basis, the amount of the payment on behalf of that person shall 
be reduced in proportion to the degree to which that person is not 
attending on a full-time basis. 
"(4)(A) The Secretary shall pay to each institution of higher 
education which has had an application approved under subsection 
(c) the amount to which it is entitled under this section. If the 
amount appropriated for any fiscal year is not sufficient to pay the 
amounts to which all such institutions are entitled, the Secretary 
shall ratably reduce such payments. If any amounts become avail-
able for a fiscal year after such reductions have been imposed, such 
reduced payments shall be increased on the same basis as they were 
reduced. 
"(B) The maximum amount of payments to any institution of 
higher education, or any branch thereof which is located in a 
community which is different from that in which the parent institu-
tion thereof is located, in any fiscal year shall be $75,()00. In making 
payments under this section for any fiscal year, the Secretary shall 
apportion the appropriation for making such payments, from funds 
which become available as a result of the limitation on payments set 
forth in the preceding sentence, in such a manner as will result in 
the receipt by each institution which is eligible for payment under 
this section of the first $9,000 (or the amount of its entitlement for 
that fiscal year, but not less than $1,000, whichever is the lesser) and 
then additional amounts up to the limitation set forth in the preced-
ing sentence. 
"(5) Not less than 90 percent of the amounts paid to any institu-
tion under paragraph (3)(A) in any fiscal year shall be used to 
implement the requirement of subsection (c)(2)(C)(i), and to the 
extent that such funds remain after implementing such require-
ment, funds limited by such 90 percent requirement shall be used 
' 
•"' 
for implementing the requirements of clauses (ii) through (v) of 
subsection (c)(2)(C), except that the Secretary may, in accordance 
^
l
^ 
with criteria established in regulations jointly prescribed by the 
Secretary with the Administrator, waive the requirement of this 
subsection to the extent that he finds that such institution is 
adequately carrying out all such requirements without the necessity 
for such application of such amount of the payments received under 
this subsection. 
"(c) ELIGIBIUTY FOR AWARDS.—(1) During the period beginning 
July 1, 1987, and ending September 1, 1991, each institution of 
higher education shall be entitled to a payment under, and in 
accordance with, this section during any fiscal year if the number of 
persons who are veterans with honorable discharges and are in 
attendance as undergraduate students at the institution is at least 
100. 
"(2) An institution of higher education shall be eligible to receive 
the payment to which it is entitled under this section only if it 
100 STAT. 1350 
PUBLIC LAW 99-498—OCT. 17, 1986 
makes application therefor to the Secretary. An application under 
this section shall be submitted at such time or times, in such 
manner, in such form and containing such information as the 
Secretary determines necessary to carry out the functions of the 
Secretary under this title, and shall— 
"(A) set forth such policies, assurances, and procedures as will 
ensure that— 
V 
"(i) the funds received by the institution under this sec-
» 
tion and available to it after the requirements of subsection 
(e) have been met will be used solely to defray instructional 
expenses in academically related programs of the applicant; 
;. 
"(ii) the funds received by the institution under this 
section will not be used for a school or department of 
divinity or for any religious worship or sectarian activity; 
"(iii) the applicant will expend, during the academic year 
for which a payment is sought, for all academically related 
programs of the institution, an amount equal to at least the 
average amount so expended during the 3 years preceding 
the year for which the grant is sought; 
"(iv) the applicant will expend, during the academic year 
for which a payment is sought, for enhancing the functions 
of the Veterans Education Outreach Program, an amount 
V) . 
equal to at least the amount of the award under this section 
from sources other than this or any other Federal program; 
and 
"(v) the applicant will submit to the Secretary such re-
ports as the Secretary may require by regulation; 
"(B) contain such other statement of policies, assurances, and 
procedures as the Secretary may require by regulation in order 
to protect the financial interests of the United States; and 
"(C) set forth such plans, policies, assurances, and procedures 
as will ensure that the applicant will make an adequate effort— 
I 
"(i) to maintain an office of veterans' affairs which has 
responsibility for veterans' outreach, recruitment, and spe-
cial education programs, including the provision of edu-
cational, vocational, and personal counseling for veterans, 
"(ii) to carry out programs designed to prepare education-
ally disadvantaged veterans for postsecondary education (I) 
under subchapter V of chapter 34 of title 38, United States 
38 use 1690 et 
Code, and (II) in the case of any institution located near a 
*^^' 
military installation, under subchapter VI of such chapter 
38 u s e 1695 et 
34, 
*^^' 
"(iii) to carry out active outreach (with special emphasis 
p 
on service-connected disabled veterans, other disabled or 
,j 
handicapped 
veterans, 
incarcerated 
veterans, 
and 
educationally disadvantaged veterans), recruiting, and 
n 
counseling activities through the use of funds available 
under federally assisted work-study programs (with special 
V 
emphasis on the veteran-student services program under 
i; 
section 1685 of such title 38), 
"(iv) to carry out an active tutorial assistance program 
for veterans, including dissemination 
of 
information 
: 
regarding such program, with special emphasis on making 
maximum use of the benefits available under section 1692 
of such title 38, and 
»'#i3' 
"(v) to coordinate activities carried out under this part 
, v
y 
with the readjustment counseling program authorized 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1351 
under section 612A of title 38, United States Code, and with 
the programs of veterans employment and training au-
thorized under the Job Training Partnership Act and under 
29 USC 1501 
chapters 41 and 42 of title 38, United States Code, in order 
^^^^^ 2000 
to assist in serving the readjustment, rehabilitation, per- 
2011 et sea 
sonal counseling, and employment needs of veterans, 
except that an institution which the Secretary determines, in 
accordance with regulations jointly prescribed by the Secretary and 
the Administrator of Veterans' Affairs (hereinafter referred to as 
the 'Administrator'), cannot feasibly itself, in terms of the number 
of veterans in attendance there, carry out any or all of the programs 
set forth in clauses (i) through (v) of subparagraph (C), may carry out 
such program or programs through a consortium agreement with 
one or more other institutions of higher education and shall be 
required to carry out such programs only to the extent that the 
Secretary determines, in accordance with regulations jointly pre-
scribed by the Secretary and the Administrator, is appropriate in 
terms of the number of veterans in attendance at such institution. 
The adequacy of efforts to meet the requirements of subparagraph 
(C) of this paragraph shall be determined by the Secretary, based 
upon the recommendations of the Administrator, in accordance with 
criteria established in regulations jointly prescribed by the Sec-
retary and the Administrator. 
"(3) The Secretary shall not approve an application under this 
subsection unless he determines that the applicant will implement 
the requirements of subparagraph (C) of paragraph (1) within the 
first academic year during which it receives a payment under this 
section. 
"(4) Any institution which has been eligible under this section 
prior to September 30, 1985, for a continuous period of three of the 
last five years shall be determined eligible under the terms of this 
section. 
"(d) COORDINATION OF PROGRAMS.—The Secretary, in carrying out 
the provisions of this section, shall seek to assure the coordination of 
programs assisted under this section with programs carried out by 
the Veterans' Administration pursuant to title 38, United States 
Code, and the Administrator shall provide all assistance, technical 
consultation, and information otherwise authorized by law as nec-
essary to promote the maximum effectiveness of the activities and 
programs assisted under this section. 
"(e) ADMINISTRATION OF PROGRAM.—The program provided for in 
this section shall be administered by an identifiable administrative 
unit in the Department. 
"(f) DISSEMINATION OF INFORMATION.—From the amounts appro-
priated for this section, the Secretary shall retain one percent or 
$10,000, whichever is less, for the purpose of collecting information 
about exemplary Veterans Educational Outreach Programs and 
disseminating that information to other institutions of higher edu-
cation having such programs on their campuses. Such collection and 
dissemination shall be done on an annual basis. 
100 STAT. 1352 
PUBLIC LAW 99-498—OCT. 17, 1986 
'SUBPART 8—SPECIAL CHILD CARE SERVICES FOR DISADVANTAGED 
COLLEGE STUDENTS 
Grants. 
20 use 1070f. 
20 use 1070a-l 
note. 
20 use 1001 
note. 
SPECIAL CHILD CARE SERVICES FOR DISADVANTAGED COLLEGE 
STUDENTS 
"SEC. 420B. (a) PROGRAM AUTHORITY.—Funds appropriated pursu-
ant to subsection (c) shall be used by the Secretary to make grants to 
institutions of higher education to provide special child care services 
to disadvantaged students. 
"(b) APPLICATIONS.—Any institution wishing to receive a grant 
under this section shall submit an application to the Secretary. Such 
application shall include— 
"(1) a description of the program to be established; 
"(2) assurances by the applicant to the Secretary that— 
. 
"(A) not less than two-thirds of the participants in the 
program are low-income individuals; 
"(B) the remaining participants in the program are either 
low-income individuals; 
"(C) the participants require the services to pursue a 
successful program of education beyond high school; 
.> > 
"(D) the participants are enrolled at the institution which 
is the recipient of the grant; 
"(E) all participants will receive sufficient assistance 
(under this subpart, other provisions of this title, or other-
wise) to meet that student's full financial need for child 
care services related to such enrollment; and 
, . 
"(F) the institution will meet such need of participants by 
providing child care through vouchers, contracted services, 
or direct provision of services; and 
"(3) such information (and meet such conditions) as may be 
required by the Secretary. 
"(c) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 
be appropriated to carry out the purpose of this section, $10,000,000 
for fiscal year 1987, and such sums as may be necessary for the 4 
succeeding fiscal years. 
"(d) DEFINITIONS.—For the purpose of this subpart— 
"(1) the term 'first generation college student' means— 
"(A) an individual both of whose parents did not complete 
a baccalaureate degree; or 
fej i 
"(B) in the case of any individual who regularly resided 
with and received support from only one parent, an individ-
r<l 
ual whose only such parent did not complete a bacca-
laureate degree; and 
"(2) the term 'low-income individual' means an individual 
from a family whose taxable income for the preceding year did 
not exceed 150 percent of an amount equal to the poverty level 
determined by using criteria of poverty established by the 
Bureau of the Census.", 
(b) EFFECTIVE DATES.—(1) Except as provided in paragraph (2), 
sections 411A through 411F of the Act as amended by this section 
shall apply with respect to the determination of need for Pell Grants 
for academic years beginning with academic year 1988-1989. With 
respect to any preceding academic year, such determinations shall 
be made in accordance with regulations prescribed by the Secretary 
of Education in accordance with the Student Financial Assistance 
Technical Amendments Act of 1982. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1353 
(2) The definition of independent student contained in section 
411F(12) of the Act as amended by this section shall apply with 
respect to the determination of such need for academic years begin-
ning with academic year 1987-1988. 
(3) Section 411(c) of the Act as amended by this section shall apply 
only to individuals who receive a Pell Grant for the first time for a 
period of enrollment beginning on or after July 1,1987. 
(4) Section 411(f) of the Act as amended by this section shall apply 
to the awarding of Pell Grants for periods of enrollment beginning 
on or after July 1,1987. 
(5) Section 413C(c)(2) of the Act as amended by this section shall 
apply to the awarding of grants under subpart 2 of part A of title IV 
of the Act for periods of enrollment beginning on or after July 1, 
1987. 
(6) The changes made in section 417D of the Act shall apply with 
respect to grants awarded under such section in fiscal year 1988 or 
any succeeding fiscal year. 
SEC. 402. EXTENSION OF GUARANTEED STUDENT LOAN PROGRAM. 
(a) AMENDMENT.—Part B of title IV of the Act (20 U.S.C. 1071 et 
seq.) is amended to read as follows: 
20 u s e 1070a-l 
note. 
20 u s e 1070a 
note. 
20 u s e 1070a 
note. 
20 u s e 1070b-2 
note. 
20 u s e 1070d-lb 
note. 
'PART B—GUARANTEED STUDENT LOAN PROGRAM 
STATEMENT OF PURPOSE; NONDISCRIMINATION; AND APPROPRIATIONS 
AUTHORIZED 
"SEC. 421. (a) PURPOSE; DISCRIMINATION PROHIBITED.— 
"(1) PURPOSE.—The purpose of this part is to enable the 
Secretary— 
"(A) to encourage States and nonprofit private institu-
tions and organizations to establish adequate loan insur-
ance programs for students in eligible institutions (as de-
fined in section 435), 
f 
"(B) to provide a Federal program of student loan insur-
ance for students or lenders who do not have reasonable 
access to a State or private nonprofit program of student 
loan insurance covered by an agreement under section 
428(b), 
"(C) to pay a portion of the interest on loans to qualified 
students which are insured under this part, and 
"(D) to guarantee a portion of each loan insured 
under a program of a State or of a nonprofit private institu-
tion or organization which meets the requirements of sec-
tion 428(aXlXB). 
"(2) DISCRIMINATION BY CREDITORS PROHIBITED.—No agency, 
organization, institution, bank, credit union, corporation, or 
other lender who regularly extends, renews, or continues credit 
or provides insurance under this part shall exclude from receipt 
or deny the benefits of, or discriminate against any borrower or 
applicant in obtaining, such credit or insurance on the bsisis of 
race, national origin, religion, sex, marital status, age, or handi-
capped status. 
"(b) 
AUTHORIZATION OF APPROPRIATIONS.—For the 
purpose 
of 
carrying out this part— 
"(1) there are authorized to be appropriated to the student 
loan insurance fund (established by section 431) (A) the sum of 
State and local 
governments. 
Insurance. 
20 u s e 1071. 
100 STAT. 1354 
PUBLIC LAW 99-498—OCT. 17, 1986 
, : . 1 
$1,000,000, and (B) such further sums, if any, as may become 
> 
necessary for the adequacy of the student loan insurance fund, 
"(2) there are authorized to be appropriated, for payments 
under section 428 with respect to interest on student loans and 
sf 
>' af 
for payments under section 437, such sums for the fiscal year 
I 
, 
ending June 30, 1966, and succeeding fiscal years, as may be 
required therefor, 
"(3) there is authorized to be appropriated the sum of 
$17,500,000 for making advances pursuant to section 422 for the 
reserve funds of State and nonprofit private student loan insur-
; I 
ance programs, 
"(4) there are authorized to be appropriated (A) the sum of 
$12,500,000 for making advances after June 30, 1968, pursuant 
to sections 422 (a) and (b), and (B) such sums as may be 
> 
,,' 
. . 
necessary for making advances pursuant to section 422(c), for 
the reserve funds of State and nonprofit private student loan 
insurance programs, and 
"(5) there are authorized to be appropriated such sums as may 
be necessary for the purpose of paying an administrative cost 
allowance in accordance with section 428(f) to guaranty 
agencies. 
Sums appropriated under paragraphs (1), (2), (4), and (5) of this 
subsection shall remain available until expended. No additional 
sums are authorized to be appropriated under paragraph (3) or (4) 
of this subsection by reason of the reenactment of such paragraphs 
by the Higher Education Amendments of 1986. 
"ADVANCES FOR RESERVE FUNDS OF STATE AND NONPROFIT PRIVATE 
LOAN INSURANCE PROGRAMS 
20 use 1072. 
"SEC. 422. (a) PURPOSE OF AND AUTHORITY FOR ADVANCES TO 
RESERVE FUNDS.— 
"(1) PURPOSE; ELIGIBLE RECIPIENTS.—From sums appropriated 
pursuant to paragraphs (3) and (4)(A) of section 421(b), the 
Secretary is authorized to make advances to any State with 
which the Secretary has made an agreement pursuant to sec-
tion 428(b) for the purpose of helping to establish or strengthen 
the reserve fund of the student loan insurance program covered 
by that agreement. If for any fiscal year a State does not have a 
student loan insurance program covered by an agreement made 
pursuant to section 428(b), and the Secretary determines after 
consultation with the chief executive officer of that State that 
there is no reasonable likelihood that the State will have such a 
student loan insurance program for such year, the Secretary 
may make advances for such year for the same purpose to one 
or more nonprofit private institutions or organizations with 
which the Secretary has made an agreement pursuant to sec-
tion 428(b) in order to enable students in the State to participate 
in a program of student loan insurance covered by such an 
agreement. The Secretary may make advances under this 
subsection both to a State program (with which he has such an 
agreement) and to one or more nonprofit private institutions or 
organizations (with which he has such an agreement) in that 
State if he determines that such advances are necessary in 
order that students in each eligible institution have access 
through such institution to a student loan insurance program 
which meets the requirements of section 428(b)(1). 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1355 
"(2) MATCHING REQUIREMENT.—NO advance shall be made 
after June 30, 1968, unless matched by an equal amount from 
non-Federal sources. Such equal amount may include the 
unencumbered non-Federal portion of a reserve fund. As used in 
the preceding sentence, the term 'unencumbered non-Federal 
portion' means the amount (determined as of the time imme-
diately preceding the making of the advance) of the reserve 
fund less the greater of— 
"(A) the sum of— 
"(i) advances made under this section prior to July 1, 
1968; 
"(ii) an amount equal to twice the amount of ad-
vances made under this section after June 30,1968, and 
;
* 
before the advance for purposes of which the deter-
mination is made; and 
"(iii) the proceeds of earnings on advances made 
under this section; or 
"(B) any amount which is required to be maintained in 
such fund pursuant to State law or regulation, or by agree-
ment with lenders, as a reserve against the insurance of 
outstanding loans. 
"(3) TERMS AND CONDITIONS; REPAYMENT.—Advances pursuant 
to this subsection shall be upon such terms and conditions 
(including conditions relating to the time or times of payment) 
consistent with the requirements of section 428(b) as the Sec-
retary determines will best carry out the purpose of this section. 
Advances made by the Secretary under this subsection shall be 
repaid within such period as the Secretary may deem to be 
appropriate in each case in the light of the maturity and 
solvency of the reserve fund for which the advance was made. 
'(b) LIMITATIONS ON TOTAL ADVANCES.— 
"(1) IN GENERAL.—The total of the advances from the sums 
appropriated pursuant to paragraph (4XA) of section 421(b) to 
nonprofit private institutions and organizations for the benefit 
of students in any State and to such State may not exceed an 
amount which bears the same ratio to such sums as the popu-
lation of such State aged 18 to 22, inclusive, bears to the 
population of all the States aged 18 to 22 inclusive, but such 
advances may otherwise be in such amounts as the Secretary 
determines will best achieve the purposes for which they are 
made. The amount available for advances to any State shall not 
be less than $25,000 and any additional funds needed to meet 
this requirement shall be derived by proportionately reducing 
(but not below $25,000) the amount available for advances to 
each of the remaining States. 
"(2) CALCULATION OF POPULATION.—For the purpose of this 
subsection, the population aged 18 to 22, inclusive, of each State 
and of all the States shall be determined by the Secretary on the 
basis of the most recent satisfactory data available to him. 
'(c) ADVANCES FOR INSURANCE OBUGATIONS.— 
"(1) 
USE FOR PAYMENT OF INSURANCE OBUGATIONS.—From 
sums appropriated pursuant to section 421(b)(4XB), the Sec-
retary shall advance to each State which has an agreement with 
the Secretary under section 428(c) with respect to a student loan 
insurance program, an amount determined in accordance with 
paragraph (2) of this subsection to be used for the purpose of 
100 STAT. 1356 
PUBLIC LAW 99-498—OCT. 17, 1986 
making payments under the State's insurance obligations under 
such program. 
"(2) AMOUNT OF ADVANCES.—(A) Except as provided in 
subparagraph (B), the amount to be advanced to each such State 
shall be equal to 10 percent of the principal amount of loans 
made by lenders and insured by such agency on those loans on 
which the first payment of principal became due during the 
fiscal year immediately preceding the fiscal year in which the 
advance is made. 
"(B) The amount of any advance determined according to 
subparagraph (A) of this paragraph shall be reduced by— 
"(i) the amount of any advance or advances made to such 
I 
State pursuant to this subsection at an earlier date; and 
"(ii) the amount of the unspent balance of the advances 
made to a State pursuant to subsection (a). 
Notwithstanding subparagraph (A) and the preceding sentence 
of this subparagraph, but subject to subparagraph (D) of this 
paragraph, the amount of any advance to a State described in 
paragraph (5)(A) for the first year of its eligibility under such 
paragraph, and the amount of any advance to any State de-
scribed in paragraph (5)(B) for each year of its eligibility under 
such paragraph, shall not be less than $50,000. 
"(C) For the purpose of subparagraph (B), the unspent balance 
of the advances made to a State pursuant to subsection (a) shall 
be that portion of the balance of the State's reserve fund 
(remaining at the time of the State's first request for an ad-
vance pursuant to this subsection) which bears the same ratio to 
such balance as the Federal advances made and not returned by 
such State, pursuant to subsection (a), bears to the total of all 
past contributions to such reserve funds from all sources (other 
than interest on investment of any portion of the reserve fund) 
contributed since the date such State executed an agreement 
pursuant to section 4280t)). 
"(D) If the sums appropriated for any fiscal year for paying 
the amounts determined under subparagraphs (A) and (B) are 
not sufficient to pay such amounts in full, then such amounts 
shall be reduced— 
"(i) by ratably reducing that portion of the amount allo-
cated to each State which exceeds $50,000; and 
"(ii) if further reduction is required, by equally reducing 
the $50,000 minimum allocation of each State. 
If additional sums become available for paying such amounts 
for any fiscal year during which the preceding sentence has 
been applied, such reduced amounts shall be increased on the 
same basis as they were reduced. 
"(3) USE OF EARNINGS FOR INSURANCE OBUGATIONS.—The earn-
ings, if any, on any investments of advances received pursuant 
to this subsection must be used for making payments under the 
State's insurance obligations. 
"(4) REPAYMENT OF ADVANCES.—Advances made by the Sec-
retary under this subsection shall, subject to subsection (d), be 
repaid within such period as the Secretary may deem to be 
appropriate and shall be deposited in the fund established by 
section 431. 
"(5) LIMITATION ON NUMBER OF ADVANCES.—Advances puisu-
ant to this subsection shall be made to a State— 
- . 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1357 
"(A) in the case of a State which is actively carrying on a 
program under an agreement pursuant to section 428(b) 
which was entered into before October 12, 1976, upon such 
date as such State may request, but not before October 1, 
1977, and on the same day of each of the 2 succeeding 
calendar years after the date so requested; and 
"(B) in the case of a State which enters into an agreement 
pursuant to section 428(b) on or after October 12, 1976, or 
which is not actively carrying on a program under an 
agreement pursuant to such section on such date, upon 
such date as such State may request, but not before October 
1, 1977, and on the same day of each of the 4 succeeding 
calendar years after the date so requested of the advance. 
"(6) PAYMENT OF ADVANCES WHERE NO STATE PROGRAM.—(A) If 
; O' -"; 
for any fiscal year a State does not have a student loan insur-
ance program covered by an agreement made pursuant to sec-
tion 428(b), and the Secretary determines after consultation 
with the chief executive officer of that State that there is no 
reasonable likelihood that the State will have such a student 
loan insurance program for such year, the Secretary may make 
. 
advances pursuant to this subsection for such year for the same 
purpose to one or more nonprofit private institutions or 
organizations with which he has made an agreement pursuant 
to subsection (c), as well as subsection (b), of section 428 and 
subparagraph (B) of this paragraph in order to enable students 
in that State to participate in a program of student loan insur-
ance covered by such agreements. 
"(B) The Secretary may enter into an agreement with a 
private nonprofit institution or organization for the purpose of 
this paragraph under which such institution or organization— 
"(i) agrees to establish within such State at least one 
office with sufficient staff to handle written and telephone 
inquiries from students, eligible lenders, and other persons 
in the State, to encourage maximum commercial lender 
participation within the State, and to conduct periodic 
visits to at least the major eligible lenders within the State; 
"(ii) agrees that its insurance will not be denied any 
student because of his or her choice of eligible institutions; 
and 
"(iii) certifies that it is neither an eligible institution, nor 
has any substantial affiliation with an eligible institution. 
"(d) RECOVERY OF ADVANCES DURING FISCAL YEARS 1988 AND 
1989.— 
"(1) AMOUNT AND USE OF RECOVERED FUNDS.—Notwithstand-
ing any other provision of this section, advances made by the 
Secretary under this section shall be repaid in accordance with 
this subsection and shall be deposited in the fund established by 
section 431. The Secretary shall, in accordance with the require-
ments of paragraph (2), recover (and so deposit) an amount 
equal to $75,000,000 during fiscal year 1988 and an amount 
equal to $35,000,000 for fiscal year 1989. 
"(2) DETERMINATION OF GUARANTY AGENCY OBUGATIONS.—In 
determining the amount of advances which shall be repaid by a 
guaranty agency under paragraph (1), the Secretary— 
"(A) shall consider the solvency and maturity of the 
reserve and insurance funds of the guaranty agency as-
sisted by such advances, as determined by the Comptroller 
100 STAT. 1358 
PUBLIC LAW 99-498—OCT. 17, 1986 
> '" 
General taking into account the requirements of State law 
as in effect on the date of enactment of the Higher Edu-
• - 
cation Amendments of 1986; 
"(B) shall not seek repayment of such advances from any 
• 
State described in subsection (c)(5)(B) during any year of its 
eligibility under such subsection; and 
^ 
"(C) shall not seek repayment of such advances from any 
State if such repayment encumbers the reserve fund 
requirement of State law as in effect on such date of 
enactment. 
"EFFECTS OF ADEQUATE NON-FEDERAL PROGRAMS 
20 use 1073. 
"SEC. 423. (a) FEDERAL INSURANCE BARRED TO LENDERS WITH 
ACCESS TO STATE OR PRIVATE INSURANCE.—Except as provided in 
subsection (b), the Secretary shall not issue certificates of insurance 
under section 429 to lenders in a State if the Secretary determines 
that every eligible institution has reasonable access in that State to 
a State or private nonprofit student loan insurance program which 
is covered by an agreement under section 428(b). 
"(b) EXCEPTIONS.—The Secretary may issue certificates of insur-
ance under section 429 to a lender in a State— 
"(1) for insurance of a loan made to a student borrower who 
does not, by reason of the borrower's residence, have access to 
• 
loan insurance under the loan insurance program of such State 
""i- (or under any private nonprofit loan insurance program which 
has received an advance under section 422 for the benefit of 
y 
students in such State); 
^ 
"(2) for insurance of all the loans made to student borrowers 
by a lender who satisfies the Secretary that, by reason of the 
residence of such borrowers, such lender will not have access to 
any single State or nonprofit private loan insurance program 
which will insure substantially all of the loans such lender 
^ 
intends to make to such student borrowers; or 
"(3) under such circumstances as may be approved by the 
' 
guaranty agency in such State, for the insurance of a loan to a 
borrower for whom such lender previously was issued such a 
•
'
^ 
certificate if the loan covered by such certificate is not yet 
repaid. 
"SCOPE AND DURATION OF FEDERAL LOAN INSURANCE PROGRAM 
20 use 1074. 
"SEC. 424. (a) LIMITATIONS ON AMOUNTS OF LOANS COVERED BY 
FEDERAL INSURANCE.—The total principal amount of new loans 
made and installments paid pursuant to lines of credit (as defined in 
section 435) to students covered by Federal loan insurance under 
this part shall not exceed $2,000,000,000 for the period from July 1, 
1976, to September 30, 1976, and for each of the succeeding fiscal 
years ending prior to October 1, 1992. Thereafter, Federal loan 
insurance pursuant to this part may be granted only for loans made 
(or for loan installments paid pursuant to lines of credit) to enable 
students, who have obtained prior loans insured under this part, to 
continue or complete their educational program; but no insurance 
may be granted for any loan made or installment paid after Septem-
ber 30,1997. 
"(b) APPORTIONMENT OF AMOUNTS.—The Secretary may, if he or 
she finds it necessary to do so in order to assure an equitable 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1359 
distribution of the benefits of this part, assign, within the maximum 
amounts specified in subsection (a), Federal loan insurance quotas 
applicable to eligible lenders, or to States or areas, and may from 
time to time reassign unused portions of these quotas. 
"LIMITATIONS ON INDIVIDUAL FEDERALLY INSURED LOANS AND ON 
FEDERAL LOAN INSURANCE 
"SEC. 425. (a) ANNUAL AND AGGREGATE LIMITS.— 
20 use 1075. 
"(1) ANNUAL LIMITS.—(A) The total of loans made to a student 
in any academic year or its equivalent (as determined by the 
Secretary) which may be covered by Federal loan insurance 
under this part may not exceed— 
"(i) $2,625, in the case of a student who has not success-
fully completed the first and second year of a program of 
undergraduate education; 
"(ii) $4,000, in the case of a student who has successfully 
completed such first and second year but who has not 
successfully completed the remainder of a program of 
B 
undergraduate education; or 
"(iii) $7,500, in the case of a graduate or professional 
student (as defined in regulations of the Secretary). 
"(B) The annual insurable limits contained in subparagraph 
(A) shall not apply in cases where the Secretary determines, 
pursuant to regulations, that a higher amount is warranted in 
order to carry out the purpose of this part with respect to 
students engaged in specialized training requiring exceptionally 
high costs of education. The annual insurable limit per student 
shall not be deemed to be exceeded by a line of credit under 
which actual payments by the lender to the borrower will not be 
made in any year in excess of the annual limit. 
"(2) AGGREGATE UMITS.—(A) The aggregate insured unpaid 
principal amount for all such insured loans made to any student 
shall not at any time exceed— 
"(i) $17,250, in the case of any student who has not 
successfully completed a program of undergraduate edu-
'^ 
cation; and 
"(ii) $54,750, in the case of any graduate or professional 
student (as defined by regulations of the Secretary and 
including any loans which are insured by the Secretary 
under this part, or by a guaranty agency, made to such 
person before he or she became a graduate or professional 
student). 
"(B) The Secretary may increase the aggregate insurable limit 
applicable to students who are pursuing programs which the 
Secretary determines are exceptionally expensive. 
"(b) LEVEL OF INSURANCE COVERAGE BASED ON DEFAULT RATE.— 
"(1) REDUCTION FOR DEFAULTS IN EXCESS OF 5 OR 9 PERCENT.— 
(A) Except as provided in subparagraph (B), the insurance 
liability on any loan insured by the Secretary under this part 
shall be 100 percent of the unpaid balance of the principal 
amount of the loan plus interest, except that— 
"(i) if, for any fiscal year, the total amount of payments 
under section 430 by the Secretary to any eligible lender as 
described in section 435(d)(lXD) exceeds 5 percent of the 
sum of the loans made by such lender which are insured by 
the Secretary and which were in repayment at the end of 
100 STAT. 1360 
PUBLIC LAW 99-498—OCT. 17,1986 
State and local 
governments. 
Securities. 
20 u s e 1001 
note. 
' 
the preceding fiscal year, the insurance liability under this 
subsection for that portion of such excess which represents 
loans insured after the applicable date with respect to such 
loans, as determined under subparagraph (C), shall be equal 
to 90 percent of the amount of such portion; or 
'" 
"(ii) if, for any fiscal year, the total amount of such 
payments to such a lender exceeds 9 percent of such sum, 
the insurance liability under this subsection for that por-
tion of such excess which represents loans insured after the 
applicable date with respect to such loans, as determined 
under subparagraph (C), shall be equal to 80 percent of the 
amount of such portion. 
"(B) Notwithstanding subparagraph (A), the provisions of 
clauses (i) and (ii) of such subparagraph shall not apply to an 
eligible lender as described in section 435(dXl)(D) for the fiscal 
year in which such lender begins to carry on a loan program 
insured by the Secretary, or for any of the 4 succeeding fiscal 
years. 
"(C) The applicable date with respect to a loan made by an 
eligible lender as described in section 435(d)(1)(D) shall be— 
"(i) the 90th day after the adjournment of the next 
regular session of the appropriate State legislature which 
convenes after the date of enactment of the Education 
Amendments of 1976, or 
"(ii) if the primary source of lending capital for such 
lender is derived from the sale of bonds, and the constitu-
tion of the appropriate State prohibits a pledge of such 
State's credit as security against such bonds, the day which 
is one year after such 90th day. 
"(2) COMPUTATION OF AMOUNTS IN REPAYMENT.—For the pur-
pose of this subsection, the sum of the loans made by a lender 
which are insured by the Secretary and which are in repayment 
shall be the original principal amount of loans made by such 
lender which are insured by the Secretary reduced by— 
"(A) the amount the Secretary has been required to pay 
to discharge his or her insurance obligations under this 
part; 
"(B) the original principal amount of loans insured by the 
Secretary which have been fully repaid; 
"(C) the original principal amount insured on those loans 
for which payment of first installment of principal has not 
become due pursuant to section 427(a)(2)(B) or such first 
installment 
need 
not be paid 
pursuant 
to 
section 
427(a)(2)(C); and 
"(D) the original principal amount of loans repaid by the 
Secretary under section 437. 
"(3) PAYMENTS TO ASSIGNEES.—For the purpose of this subsec-
tion, payments by the Secretary under section 430 to an as-
signee of the lender with respect to a loan shall be deemed 
payments made to such lender. 
"(4) PLEDGE OF FULL FAITH AND CREDIT.—The full faith and 
credit of the United States is pledged to the payment of all 
amounts which may be required to be paid under the provisions 
of section 430 or 437 of this part. 
} .^5 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1361 
"SOURCES OF FUNDS 
"SEC. 426. Loans made by eligible lenders in accordance with this 
20 USC 1076. 
part shall be insurable by the Secretary whether made from funds 
fully owned by the lender or from funds held by the lender in a trust 
or similar capacity and available for such loans. 
"EUGIBILITY OF STUDENT BORROWERS AND TERMS OF FEDERALLY 
INSURED STUDENT LOANS 
"SEC. 427. 
(a) LIST OF REQUIREMENTS.—Except as provided in 
20 USC 1077. 
section 428C, a loan by an eligible lender shall be insurable by the 
Secretary under the provisions of this part only if— 
"(1) made to a student who (A) is an eligible student under 
section 484, (B) has agreed to notify promptly the holder of the 
loan concerning any change of address, and (C) is carrying at 
least one-half the normal full-time academic workload for the 
7 
course of study the student is pursuing (as determined by the 
institution); and 
"(2) evidenced by a note or other written agreement which— 
"(A) is made without security and without endorsement, 
except that if the borrower is a minor and such note or 
other written agreement executed by the borrower would 
not, under the applicable law, create a binding obligation, 
endorsement may be required; 
"(B) provides for repayment (except as provided in subsec-
tion (c)) of the principal amount of the loan in installments 
over a period of not less than 5 years (unless sooner repaid 
or unless the student, during the 6 months preceding the 
start of the repayment period, specifically requests that 
repayment be made over a shorter period) nor more than 10 
years beginning 6 months after the month in which the 
student ceases to carry at an eligible institution at least 
one-half the normal full-time academic workload as deter-
mined by the institution, except— 
"(i) as provided in subparagraph (C); 
"(ii) that the note or other written instrument may 
contain such reasonable provisions relating to repay-
ment in the event of default in the payment of interest 
or in the payment of the cost of insurance premiums, or 
other default by the borrower, as may be authorized by 
regulations of the Secretary in effect at the time the 
loan is made; and 
"(iii) that the lender and the student, after the stu-
dent ceases to carry at an eligible institution at least 
one-half the normal full-time academic workload as 
determined by the institution, may agree to a repay-
ment schedule which begins earlier, or is of shorter 
duration, than required by this subparagraph, but in 
the event a borrower has requested and obtained a 
repayment period of less than 5 years, the borrower 
may at any time prior to the total repayment of the 
loan, have the repayment period extended so that the 
total repayment period is not less than 5 years; 
"(C) provides that periodic installments of principal need 
not be paid, but interest shall accrue and be paid, during 
any period— 
100 STAT. 1362 
PUBLIC LAW 99-498—OCT. 17, 1986 
Armed Forces. 
Voluntarism. 
22 u s e 2501 
note. 
42 use 4951 
note. 
26 u s e 501. 
29 u s e 206. 
Si' 
"(i) during which the borrower (I) is pursuing a full-
time course of study at an eligible institution, (II) is 
pursuing at least a half-time course of study (as deter-
mined by such institution) during an enrollment period 
for which the student has obtained a loan under this 
part, or (III) is pursuing a course of study pursuant to a 
graduate fellowship program approved by the Sec-
retary, or pursuant to a rehabilitation training pro-
gram 
for 
disabled 
individuals 
approved 
by 
the 
Secretary; 
"(ii) not in excess of 3 years during which the bor-
rower is a member of the Armed Forces of the United 
States, is an active duty member of the National Oce-
anic and Atmospheric Administration Corps, or is an 
officer in the Commissioned Corps of the Public Health 
Service; 
"(iii) not in excess of 3 years during which the bor-
rower is in service as a volunteer under the Peace 
Corps Act; 
"(iv) not in excess of 3 years during which the bor-
rower is in service as a full-time volunteer under the 
Domestic Volunteer Service Act of 1973; 
"(v) not in excess of 3 years during which the bor-
rower is in service, comparable to the service referred 
to in clauses (iii) and (iv), as a full-time volunteer for an 
organization which is exempt from taxation under sec-
tion 501(c)(3) of the Internal Revenue Code of 1954; 
"(vi) not in excess of 3 years during which the bor-
rower is engaged as a full-time teacher in a public or 
private elementary or secondary school in a teacher 
shortage area established by the Secretary pursuant to 
section 428(bX4); 
"(vii) not in excess of 2 years during which the 
', borrower is serving an internship, the successful 
completion of which is required in order to receive 
professional recognition required to begin professional 
practice or service; 
"(viii) not in excess of 3 years during which the 
borrower is temporarily totally disabled, as established 
by sworn affidavit of a qualified physician, or during 
which the borrower is unable to secure employment by 
regison of the care required by a dependent who is so 
disabled; 
"(ix) not in excess of 24 months, at the request of the 
borrower, during which the borrower is seeking and 
unable to find full-time employment; 
"(x) not in excess of 6 months of parental leave; or 
"(xi) not in excess of 12 months for mothers with 
preschool age children who are just entering or reenter-
ing the work force and who are compensated at a rate 
not exceeding $1 in excess of the rate prescribed under 
section 6 of the Fair Labor Standards Act of 1938, 
and that any such period shall not be included in determin-
ing the 10-year period provided in subparagraph (B); 
"(D) provides for interest on the unpaid principal balance 
of the loan at a yearly rate, not exceeding the applicable 
maximum rate prescribed in section 427A, which interest 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1363 
shall be payable in installments over the period of the loan 
except that, if provided in the note or other written agree-
ment, any interest payable by the student may be deferred 
until not later than the date upon which repayment of the 
first installment of principal falls due, in which case in-
terest accrued during that period may be added on that 
date to the principal; 
"(E) provides that the lender will not collect or attempt to 
collect from the borrower any portion of the interest on the 
note which is payable by the Secretary under this part, and 
that the lender will enter into such agreements with the 
Secretary as may be necessary for the purpose of section 
^ ^^' 
437; 
"(F) entitles the student borrower to accelerate without 
penalty repayment of the whole or any part of the loan; 
"(G)(i) contains a notice of the system, of disclosure of 
information 
concerning such loan to credit 
bureau 
organizations under section 430A, and (ii) provides that the 
lender on request of the borrower will provide information 
on the repayment status of the note to such organizations; 
and 
"(H) contains such other terms and conditions, consistent 
with the provisions of this part and with the regulations 
issued by the Secretary pursuant to this part, as may be 
agreed upon by the parties to such loan, including, if agreed 
upon, a provision requiring the borrower to pay the lender, 
in addition to principal and interest, amounts equal to the 
insurance premiums payable by the lender to the Secretary 
with respect to such loan; 
"(3) the funds borrowed by a student are disbursed to the 
institution by check or other means that is payable to and 
requires the endorsement or other certification by such student, 
except nothing in this title shall be interpreted to allow the 
Secretary to require checks to be made co-payable to the institu-
tion and the borrower or to prohibit the disbursement of loan 
proceeds by means other than by check; and 
"(4) in the case of any loan made for any period of enrollment 
that ends more than 180 days (or 6 months) after the date 
disbursement is scheduled to occur, and for an amount of more 
than $1,000, the proceeds of the loan will, subject to subsection 
(b), be disbursed directly by the lender in two or more install-
ments, none of which exceeds one-half of the loan, with the 
second installment being disbursed after not less than one-third 
of such period (except as necessary to permit the second install-
ment to be disbursed at the beginning of the second semester, 
quarter, or similar division of such period of enrollment). 
"(b) SPECIAL RULES FOR MULTIPLE DISBURSEMENT.—For the pur-
pose of subsection (a)(4)— 
"(1) all loans issued for the same period of enrollment shall be 
considered as a single loan; and 
"(2) the requirements of such subsection shall not apply in the 
case of a loan made under section 428A, 428B, or 428C, or made 
to a student to cover the cost of attendance at an eligible 
institution outside the United States. 
"(c) MINIMUM REPAYMENT RATE.—The total of the payments by a 
borrower during any year of any repayment period with respect to 
71-19A 0 - 89 - 10 : QL. 3 Part2 
100 STAT. 1364 
PUBLIC LAW 99-498—OCT. 17, 1986 
the aggregate amount of all loans to that borrower which are 
insured under this part shall not, unless the borrower and the 
lender otherwise agree, be less than $600 or the balance of all such 
loans (together with interest thereon), whichever amount is less, 
except that in the case of a husband and wife, both of whom have 
such loans outstanding, the total of the combined payments for such 
a couple during any year shall not be less than $600 or the balance 
of all such loans, whichever is less. 
' 
- 
"APPLICABLE INTEREST RATES 
20 use 1077a. 
"SEC. 427A. (a) RATES TO BE CONSISTENT FOR BORROWER'S ENTIRE 
DEBT.—With respect to any loan to cover the cost of instruction for 
any period of instruction beginning on or after January 1, 1981, the 
rate of interest applicable to any borrower shall— 
"(1) not exceed 7 percent per year on the unpaid principal 
balance of the loan in the case of any borrower who, on the date 
of entering into the note or other written evidence of that loan, 
has an outstanding balance of principal or interest on any loan 
made, insured, or guaranteed under this part, for which the 
interest rate does not exceed 7 percent; 
"(2) except as provided in paragraph (3), be 9 percent per year 
on the unpaid principal balance of the loan in the case of any 
borrower who, on the date of entering into the note or other 
written evidence of that loan, has no outstanding balance of 
principal or interest on any loan described in paragraph (1) or 
any loan for which the interest rate is determined under para-
( 
graph (1); or 
"(3) be 8 percent per year on the unpaid principal balance of 
the loan for a loan to cover the cost of education for any period 
of enrollment beginning on or after a date which is 3 months 
after a determination made under subsection (b) in the case of 
any borrower who, on the date of entering into the note or other 
written evidence of the loan, has no outstanding balance of 
principal or interest on any loan for which the interest rate is 
determined under paragraph (1) or (2) of this subsection. 
"(b) REDUCTION FOR NEW BORROWERS AFTER DECLINE IN TREASURY 
BILL RATES.—If for any 12-month period beginning on or after 
January 1,1981, the Secretary, after consultation with the Secretary 
of the Treasury, determines that the average of the bond equivalent 
rates of 91-day Treasury bills auctioned for such 12-month period is 
equal to or less than 9 percent, the interest rate for loans under this 
part shall be the rate prescribed in subsection (a)(3) for borrowers 
described in such subsection. 
"(c) RATES FOR SUPPLEMENTAL LOANS FOR STUDENTS AND LOANS 
FOR PARENTS.— 
"(1) IN GENERAL.—Except as otherwise provided in this 
subsection, the applicable rate of interest on loans made pursu-
^- ant to section 428A or 428B on or after October 1, 1981, shall be 
14 percent per year on the unpaid principal balance of the loan. 
3i 
"(2) REDUCTION OF RATE AFTER DECLINE IN TREASURY BILL 
'" RATES.—If for any 12-month period beginning on or after Octo-
* ber 1, 1981, the Secretary, after consultation with the Secretary 
of the Treasury, determines that the average of the bond 
equivalent rates of 91-day Treasury bills auctioned for such 12-
'•'••' month period is equal to or less than 14 percent, the applicable 
rate of interest for loans made pursuant to section 428A or 428B 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1365 
on and after the first day of the first month beginning after the 
date of publication of such determination shall be 12 percent 
per year on the unpaid principal balance of the loan. 
"(3) 
INCREASE OF RATE AFTER INCREASE IN TREASURY BILL 
RATES.—If for any 12-month period beginning on or after the 
date of publication of a determination under paragraph (2), the 
Secretary, after consultation with the Secretary of the Treas-
ury, determines that the average of the bond equivalent rates of 
91-day Treasury bills auctioned for such 12-month period ex-
ceeds 14 percent, the applicable rate of interest for loans made 
pursuant to section 428A or 428B on and after the first day of 
the first month beginning after the date of publication of that 
determination under this paragraph shall be 14 percent per 
year on the unpaid principal balance of the loan. 
"(4) AvAiLABiUTY OF VARIABLE RATES.—(A) For any loan made 
pursuant to section 428A or 428B to cover the cost of instruction 
for any period of enrollment beginning on or after July 1, 1987, 
or any loan made pursuant to such section prior to such date 
that is refinanced pursuant to section 428A(d) or 428B(d), the 
applicable rate of interest during any calendar year shall be 
determined under subparagraph (B), except that such rate shall 
not exceed 12 percent. 
"(B) For any calendar year, the rate determined under this 
subparagraph is determined on December 15 preceding such 
calendar year and is equal to— 
"(i) the average of the bond equivalent rates of 91-day 
Treasury bills auctioned during the 12 months ending on 
November 30 preceding such calendar year; plus 
"(ii) 3.75 percent. 
"(C) The Secretary shall determine the applicable rate of 
interest under subparagraph (B) 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 deter-
mination. 
"(d) INTEREST RATES FOR NEW BORROWERS AFTER JULY 1, 1988.— 
Notwithstanding subsections (a) and (b) of this section, with respect 
to any loan (other than a loan made pursuant to sections 428A, 
428B, and 428C) to cover the cost of instruction for any period of 
enrollment beginning on or after July 1, 1988, to any borrower who, 
on the date of entering into the note or other written evidence of the 
loan, has no outstanding balance of principal or interest on any loan 
made, insured, or guaranteed under this part, the applicable rate of 
interest shall be— 
"(1) 8 percent per year on the unpaid principal balance of the 
loan during the period beginning on the date of the disburse-
ment of the loan and ending 4 years after the commencement of 
repayment; and 
"(2) 10 percent per year on the unpaid principal balance of the 
loan during the remainder of the repayment period. 
"(e) TREATMENT OF EXCESS INTEREST PAYMENTS ON NEW BOR-
ROWER ACCOUNTS RESULTING FROM DECUNE IN TREASURY BILL 
RATES.— 
"(1) IN GENERAL.—If, with respect to a loan for which the 
applicable interest rate is 10 percent under subsection (d) of this 
section at the close of any calendar quarter, the sum of the 
average of the bond equivalent rates of 91-day Treasury bills 
auctioned for that quarter and 3.25 percent is less than 10 
Securities. 
Federal 
Register, 
publication. 
100 STAT. 1366 
PUBLIC LAW 99-498—OCT. 17, 1986 
percent, then an adjustment shall be made to a borrower's 
account— 
"(A) by calculating excess interest in the amount com-
U.M' 
puted under paragraph (2) of this subsection; and 
"(B) by crediting the excess interest to the reduction of 
principal to the extent provided for under paragraph (3) of 
this subsection. 
"(2) AMOUNT OF ADJUSTMENT.—The amount of any adjust-
ment of interest on a loan to be made under this subsection for 
any quarter shall be equal to— 
"(A) 10 percent minus the sum of (i) the average of the 
bond equivalent rates of 91-day Treasury bills auctioned for 
such calendar quarter, and (ii) 3.25 percent; multiplied by 
"(B) the outstanding principal balance of the loan (not 
including unearned interest added to principal) at the end 
of such calendar quarter; divided by 
"(C) four. 
"(3) ANNUAL ADJUSTMENT OF INTEREST AND BORROWER ELIGI-
BiUTY FOR CREDIT.—Any adjustment amount computed pursu-
ant to paragraph (2) of this subsection for any quarter shall be 
credited, by the holder of the loan on the last day of the 
calendar year in which such quarter falls, to the loan account of 
the borrower so as to reduce the principal balance of such 
account. No such credit shall be made to the loan account of a 
borrower who on the last day of the calendar year is delinquent 
for more than 30 days in making a required payment on the 
loan. Any credit which is to be made to a borrower's account 
pursuant to this subsection shall be made effective commencing 
no later than 30 days following the last day of the calendar year 
'* ' 
in which the quarter falls for which the credit is being made. 
„. ^ 
Nothing in this subsection shall be construed to require refund-
ing any repayment of a loan. At the option of the lender, the 
amount of such adjustment may be distributed to the borrower 
either by reduction in the amount of the periodic payment on 
the loan, or by reducing the number of payments that shall be 
made with respect to the loan. 
"(4) PUBUCATION OF TREASURY BILL RATE.—For the purpOSe of 
enabling holders of loans to make the determinations and 
adjustments provided for in this subsection, the Secretary shall 
for each calendar quarter commencing with the quarter begin-
ning on July 1,1987, publish a notice of the average of the bond 
equivalent rates of 91-day Treasury bills auctioned for such 
quarter. Such notice shall be published not later than 7 days 
after the end of the quarter to which the notice relates. 
"(5) STUDY OF TREATMENT OF EXCESS INTEREST PAYMENTS PROVI-
SIONS.—The Secretary shall examine and evaluate the provi-
sions of this subsection, and not later than 6 months after the 
date of enactment of the Higher Education Amendments of 
1986, prepare and submit to the Congress such legislative 
proposals £is the Secretary determines are necessary to carry 
out the objectives of this subsection. 
"(f) LESSER RATES PERMITTED.—Nothing in this section or section 
428C shall be construed to prohibit a lender from charging a bor-
rower interest at a rate less than the rate which is applicable under 
this part. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1367 
"(g) DEFINITIONS.—For the purpose of subsections (a) and (d) of 
this section— 
"(1) the term 'period of instruction' shall, at the discretion of 
the lender, be any academic year, semester, trimester, quarter, 
or other academic period; or shall be the period for which the 
loan is made as determined by the institution of higher edu-
cation; and 
"(2) the term 'period of enrollment' shall be the period for 
which the loan is made as determined by the institution of 
" ' 
higher education and shall coincide with academic terms such 
as academic year, semester, trimester, quarter, or other aca-
demic period as defined by such institution. 
"FEDERAL PAYMENTS TO REDUCE STUDENT INTEREST COSTS 
"SEC. 428. (a) FEDERAL INTEREST SUBSIDIES.— 
20 use 1078. 
"(1) TYPES OF LOANS THAT QUALIFY.—Each student who 
has 
received a loan for study at an eligible institution— 
"(A) which is insured by the Secretary under this part; or 
"(B) which is insured under a program of a State or of a 
nonprofit private institution or organization which was 
contracted for, and paid to the student, within the period 
specified in paragraph (5), and which— 
"(i) in the case of a loan insured prior to July 1, 1967, 
was made by an eligible lender and is insured under a 
program which meets the requirements of subpara-
graph (E) of subsection (b)(1) and provides that repay-
ment of such loan shall be in installments beginning 
not earlier than 60 days after the student ceases to 
pursue a course of study (as described in subparagraph 
(D) of subsection (b)(1)) at an eligible institution, or 
"(ii) in the case of a loan insured after June 30, 1967, 
was made by an eligible lender and is insured under a 
program covered by an agreement made pursuant to 
subsection (b), 
shall be entitled to have paid on his or her behalf and for his or 
her account to the holder of the loan a portion of the interest on 
such loan under circumstances described in paragraph (2). 
"(2) ADDITIONAL REQUIREMENTS TO RECEIVE SUBSIDY.—(A) Each 
student qualifying for a portion of an interest payment under 
paragraph (1) shall— 
"(i) have provided to the lender a statement from the 
eligible institution, at which the student has been accepted 
for enrollment, or at which the student is in attendance, 
which— 
i 
"(I) sets forth such student's estimated cost of attend-
ance (as determined under section 472); and 
"(II) sets forth such student's estimated financial 
assistance; and 
"(ii) meet the requirements of subparagraph (B). 
"(B) For the purpose of clause (ii) of subparagraph (A), a 
student shall qualify for a portion of an interest payment under 
paragraph (1) if the eligible institution has provided the lender 
with a statement evidencing a determination of need for a loan 
(as determined under part F of this title) and the amount of 
such need, subject to the provisions of subparagraph (D). 
"(C) For the purpose of paragraph (1) and this paragraph— 
100 STAT. 1368 
PUBLIC LAW 99-498—OCT. 17, 1986 
lo (b 
" 
"(i) a student's estimated financial assistance means, for 
the period for which the loan is sought, the amount of 
1" If 
assistance such student will receive under subpart 1 of part 
A (as determined in accordance with section 484(b)), subpart 
2 of part A, and parts C and E of this title, and any amount 
'•Jly-i 
paid the student under chapters 32, 34, and 35 of title 38, 
38 use 1601 et 
United States Code, plus other scholarship, grant, or loan 
seq., 1651 et seq., 
assistance; and 
1700 et seq. 
"(jj) ^.j^g determination of need and of the amount of a 
loan by an eligible institution under subparagraph (B) with 
;; r i 
respect to a student shall be calculated by subtracting from 
the estimated cost of attendance at the eligible institution 
the total of the expected family contribution with respect to 
such student plus any estimated financial 
assistance 
reasonably available to such student. 
--' ' 
"(D) An eligible institution may not, in carrying out the 
provisions of subparagraphs (A) and (B) of this paragraph, 
provide a statement which permits the student to receive any 
loan under this part in excess of the maximum amount ap-
plicable to such loan. 
"(E) For the purpose of subparagraphs (B) and (C) of this 
paragraph, any loan obtained by a student under section 428A 
or a parent under section 428B of this Act or under any State-
sponsored or private loan program for an academic year for 
which the determination is made may be used to offset the 
expected family contribution of the student for that year. 
"(F) Except as provided in subparagraph (D), an eligible 
institution may not, in carrying out the provisions of subpara-
graphs (A) and (B) of this paragraph, refuse to provide to any 
eligible lender which has an agreement under subsection (b) of 
this section with any guaranty agency, a statement which 
permits a student to receive any loan under this part. 
"(3) AMOUNT OF INTEREST SUBSIDY.—(A)(i) Subject to section 
438(c), the portion of the interest on a loan which a student is 
entitled to have paid, on behalf of and for the account of the 
student, to the holder of the loan pursuant to paragraph (1) of 
this subsection shall be equal to the total amount of the interest 
on the unpaid principal amount of the loan— 
"(I) which accrues prior to the beginning of the repay-
190 
ment period of the loan, or 
"(II) which accrues during a period in which principal 
need not be paid (whether or not such principal is in fact 
paid) by reason of a provision described in subsection 
(b)(l)(M) of this section or in section 427(a)(2)(C). 
"(ii) Such portion of the interest on a loan shall not exceed, 
for any period, the amount of the interest on that loan which is 
payable by the student after taking into consideration the 
amount of any interest on that loan which the student is 
entitled to have paid on his or her behalf for that period under 
any State or private loan insurance program. 
"(iii) The holder of a loan with respect to which payments are 
required to be made under this section shall be deemed to have 
a contractual right, as against the United States, to receive 
from the Secretary the portion of interest which has been so 
1.. 
determined without administrative delay after the receipt by 
the Secretary of an accurate and complete request for payment 
li? pursuant to paragraph (4). 
, 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1369 
"(iv) The Secretary shall pay this portion of the interest to the 
State and local 
holder of the loan on behalf of and for the account of the governments, 
borrower at such times as may be specified in regulations in 
force when the applicable agreement entered into pursuant to 
subsection (b) was made, or, if the loan was made by a State or is 
insured under a program which is not covered by such an 
agreement, at such times as may be specified in regulations in 
force at the time the loan was paid to the student. 
"(B) If— 
"(i) a State student loan insurance program is covered by 
an agreement under subsection (b), 
"(ii) a statute of such State limits the interest rate on 
loans insured by such program to a rate which is less than 
the applicable interest rate under this part, and 
ij ;• 
"(iii) the Secretary determines that subsection (d) does 
G - > 
not make such statutory limitation inapplicable and that 
such statutory limitation threatens to impede the carrying 
f 
out of the purpose of this part, 
then the Secretary may pay an administrative cost allowance to 
the holder of each loan which is insured under such program 
and which is made during the period beginning on the 60th day 
after the date of enactment of the Higher Education Amend-
ments of 1968 and ending 120 days after the adjournment of 20 USC lOOl 
such State's first regular legislative session which adjourns 
^°^-
after January 1, 1969. Such administrative cost allowance shall 
be paid over the term of the loan in an amount per year 
(determined by the Secretary) which shall not exceed 1 percent 
of the unpaid principal balance of the loan. 
"(4) SUBMISSION OF STATEMENTS BY HOLDERS ON AMOUNT OF 
PAYMENT.—Each holder of a loan with respect to which pay-
ments of interest are required to be made by the Secretary shall 
submit to the Secretary, at such time or times and in such 
manner as the Secretary may prescribe, statements containing 
such information as may be required by or pursuant to regula-
tion for the purpose of enabling the Secretary to determine the 
amount of the payment which he must make with respect to 
that loan. 
"(5) DURATION OF AUTHORITY TO MAKE INTEREST SUBSIDIZED 
LOANS.—The period referred to in subparagraph (B) of para-
graph (1) of this subsection shall begin on the date of enactment 
of this Act and end at the close of September 30, 1992, except 
that, in the case of a loan made or insured under a student loan 
or loan insurance program to enable a student who has obtained 
a prior loan made or insured under such program to continue 
his or her education program, such period shall end at the close 
of September 30, 1997. 
"(6) 
ASSESSMENT OF BORROWER'S FINANCIAL CONDITION NOT 
PROHIBITED O
R REQUIRED.—Nothing in this or any other Act 
shall be construed to prohibit or require, unless otherwise 
specifically provided by law, a lender to evaluate the total 
financial situation of a student making application for a loan 
under this part, or to counsel a student with respect to any such 
loan, or to make a decision based on such evaluation and 
counseling with respect to the dollar amount of any such loan. 
"(b) INSURANCE PROGRAM AGREEMENTS TO QUALIFY LOANS FOR 
INTEREST SUBSIDIES,— 
100 STAT. 1370 
PUBLIC LAW 99-498—OCT. 17, 1986 
State and local 
"(1) REQUIREMENTS OF INSURANCE PROGRAM.—Any State OF 
governments. 
any nonprofit private institution or organization may enter ir:to 
an agreement with the Secretary for the purpose of entitling 
students who receive loans which are insured under a student 
loan insurance program of that State, institution, or organiza-
tion to have made on their behalf the payments provided for in 
subsection (a) if the Secretary determines that the student loan 
insurance program— 
"(A) authorizes the insurance in any academic year or its 
X'- 
' • equivalent (as determined under regulations of the Sec-
retary) for any student who is carrjdng at an eligible 
ri. 5 
institution at least one-half the normal full-time academic 
r;; . 
workload (as determined by the institution) in any amount 
up to a maximum of— 
"(i) $2,625, in the case of a student who has not 
successfully completed the first or second year of a 
program of undergraduate education; 
"(ii) $4,000, in the case of a student who has success-
o;o.r.;;v 
fuUy completed such first and second year but who has 
not successfully completed the remainder of a program 
of undergraduate education; and 
"(iii) $7,500, in the case of a graduate or professional 
. ^ 
,, ..r 
student (as defined in regulations of the Secretary); 
.'; ;! 
except in cases where the Secretary determines, pursuant 
to regulations, that a higher amount is warranted in order 
to carry out the purpose of this part with respect to stu-
dents engaged in specialized training requiring exception-
ally high costs of education, but the annual insurable limit 
per student shall not be deemed to be exceeded by a line of 
credit under which actual payments by the lender to the 
borrower will not be made in any years in excess of the 
, 
annual limit; 
' *' 
"(B) provides that the aggregate insured unpaid principal 
amount for all such insured loans made to any student shall 
be any amount up to a maximum of— 
"(i) $17,250, in the case of any student who has not 
successfully completed a program of undergraduate 
education; and 
'"' '"^ 
"(ii) $54,750, in the case of any graduate or profes-
sional student (as defined by regulations of the Sec-
• 
retary and including any loans which are insured by 
the Secretary under this part, or by a guaranty agency, 
made to such student before the student became a 
graduate or professional student); 
except that the Secretary may increase the limit applicable 
to students who are pursuing programs which the Secretary 
determines are exceptionally expensive; 
"(C) authorizes the insurance of loans to any individual 
student for at least 6 academic years of study or their 
equivalent (as determined under regulations of the Sec-
retary); 
"(D) provides that (i) the student borrower shall be enti-
tled to accelerate without penalty the whole or any part of 
an insured loan, (ii) except as provided in subparagraph (M) 
of this paragraph, the repayment period of any insured loan 
may not exceed 10 years, and (iii) the note or other written 
evidence of any loan, may contain such reasonable provi-
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1371 
sions relating to repayment in the event of default by the 
borrower as may be authorized by regulations of the Sec-
retary in effect at the time such note or written evidence 
was executed; 
"(E) subject to subparagraphs (D) and (L) of this para-
graph and except as provided by subparagraph (M) of this 
paragraph, provides that repayment of loans shall be in 
installments over a period of not less than 5 years (unless 
the student, during the 6 months preceding the start of the 
repayment period, specifically requests that repayment be 
made over a shorter period) nor more than 10 years begin-
ning 6 months after the month in which the student ceases 
. „^ t^ 
to carry at least one-half the normal full-time academic 
workload as determined by the institution; 
"(F) authorizes interest on the unpaid balance of the loan 
at a yearly rate not in excess (exclusive of any premium for 
insurance which may be passed on to the borrower) of the 
rate required by section 427A; 
"(G) insures not less than 100 percent of the unpaid 
principal of loans insured under the program; 
"(H) provides for collection of a single insurance premium 
equal to not more than 3 percent of the principal amount of 
the loan, by deduction proportionately from each install-
ment payment of the proceeds of the loan to the borrower, 
and insures that the proceeds of the premium will not be 
used for incentive payments to lenders; 
"(I) provides that the benefits of the loan insurance pro-
gram will not be denied any student who is eligible for 
interest benefits under subsection (a) (1) and (2); 
"(J) provides that a student may obtain insurance under 
the program for a loan for any year of study at an eligible 
institution; 
"(K) in the case of a State program, provides that such State and local 
State program is administered by a single State agency, or governments. 
by one or more nonprofit private institutions or organiza-
tions under supervision of a single State agency; 
"(L) provides that the total of the payments by 
borrower— 
"(i) during any year of any repayment period with 
respect to the aggregate amount of all loans to that 
borrower which are insured under this part shall not, 
unless the borrower and the lender otherwise agree, be 
less than $600 or the balance of all such loans (together 
with interest thereon), whichever amount is less, 
except that, in the case of a husband and wife, both of 
whom have such loans outstanding, the total of the 
combined payments for such a couple during any year 
snail not be less than $600 or the balance of all such 
loans, whichever is less; and 
"(ii) for a monthly or other similar payment period 
with respect to the aggregate of all loans held by the 
lender may, when the amount of a monthly or other 
^' 
similar pajmient is not a multiple of $5, be rounded to 
the next highest whole dollar amount that is a multiple 
of $5; 
:f^ 
100 STAT. 1372 
PUBLIC LAW 99-498—OCT. 17, 1986 
Armed Forces. 
Voluntarism. 
22 use 2501 
note. 
42 use 4951 
note. 
26 use 501. 
29 use 206. 
"(M) provides that periodic installments of principal need 
not be paid, but interest shall accrue and be paid, during 
any period— 
"(i) during which the borrower (I) is pursuing a full-
time course of study as determined by an eligible 
institution, (II) is pursuing at least a half-time course of 
study (as determined by such institution) for which the 
student has obtained a loan under this part, or (III) is 
pursuing a course of study pursuant to a graduate 
fellowship program approved by the Secretary, or 
pursuant to a rehabilitation training program for dis-
abled individuals approved by the Secretary; 
"(ii) not in excess of 3 years during which the bor-
rower is a member of the Armed Forces of the United 
States, is an active duty member of the National Oce-
anic and Atmospheric Administration Corps, or is an 
officer in the Commissioned Corps of the Public Health 
Service; 
"(iii) not in excess of 3 years during which the bor-
j 
rower is in service as a volunteer under the Peace 
Corps Act; 
"(iv) not in excess of 3 years during which the bor-
rower is in service as a full-time volunteer under the 
Domestic Volunteer Service Act of 1973; 
"(v) not in excess of 3 years during which the bor-
rower is in service, comparable to the service referred 
to in clauses (iii) and (iv), as a full-time volunteer for an 
organization which is exempt from taxation under sec-
tion 501(c)(3) of the Internal Revenue Code of 1954; 
"(vi) not in excess of 3 years during which the bor-
rower is engaged as a full-time teacher in a public or 
private elementary or secondary school in a teacher 
shortage area established by the Secretary pursuant to 
paragraph (4) of this subsection; 
"(vii) not in excess of 2 years during which the 
borrower is serving an internship, the successful 
completion of which is required in order to receive 
professional recognition required to begin professional 
' ^ practice or service; 
"(viii) not in excess of 3 years during which the 
''" 
borrower is temporarily totally disabled, as established 
by sworn affidavit of a qualified physician, or during 
which the borrower is unable to secure employment by 
reason of the care required by a dependent who is so 
disabled; 
"(ix) not in excess of 24 months, at the request of the 
borrower, during which the borrower is seeking and 
unable to find full-time employment; 
"(x) not in excess of 6 months of parental leave; and 
"(xi) not in excess of 12 months for mothers with 
preschool age children who are just entering or reenter-
ing the work force and who are compensated at a rate 
not exceeding $1 in excess of the rate prescribed under 
section 6 of the Fair Labor Standards Act of 1938; 
"(N) provides that funds borrowed by a student are dis-
bursed to the institution by check or other means that is 
payable to and requires the endorsement or other certifi-
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1373 
cation by such student, except nothing in this title shall be 
interpreted to allow the Secretary to require checks to be 
made co-payable to the institution and the borrower or to 
prohibit the disbursement of loan proceeds by means other 
than by check; 
"(O) provides that the proceeds of any loan made for any 
period of enrollment that ends more than 180 days (or 6 
months) after the date disbursement is scheduled to occur, 
and for an amount of more than $1,000— 
"(i) will be disbursed directly by the lender in two or 
more installments, none of which exceeds one-half of 
the loan, with the second installment being dispensed 
after not less than one-third of such period (except as 
necessary to permit the second installment to be dis-
bursed at the beginning of the second semester, quarter, 
or similar division of such period of enrollment), or 
"(ii) will be disbursed in such installments pursuant 
to the escrow provisions of subsection (i) of this section, 
but all loans issued for the same period of enrollment shall 
be considered as a single loan for the purpose of this 
subparagraph and the requirements of this subparagraph 
shall not apply in the case of a loan made under section 
428A, 428B, or 4280, or made to a student to cover the cost 
of attendance at an eligible institution outside the United 
States; 
"(P) requires the borrower and the institution at which 
the borrower is in attendance to promptly notify the holder 
of the loan, directly or through the guaranty agency, 
concerning any change of address or status; 
"(Q) provides for the guarantee of loans made to students 
and parents under sections 428A and 428B; 
"(R) with respect to lenders which are eligible institu-
tions, provides for the insurance of loans by only such 
institutions as are located within the geographic area 
served by such guaranty agency; 
"(S) provides no restrictions with respect to the insurance State and local 
of loans for students who are otherwise eligible for loans governments, 
under such program if such a student is accepted for enroll-
ment in or is attending an eligible institution within the 
State, or if such a student is a legal resident of the State 
and is accepted for enrollment in or is attending an eligible 
institution outside that State; 
"(T) provides no restrictions with respect to eligible 
institutions which are more onerous than eligibility 
requirements for institutions under the Federal student 
loan insurance program as in effect on January I. 1985, 
unless— 
"(i) that institution is ineligible under regulations for 
the limitation, suspension, or termination of eligible 
institutions under the Federal student loan insurance 
program or is ineligible pursuant to criteria issued 
under the student loan insurance program which are 
substantially the same as regulations with respect to 
such eligibility issued under the Federal student loan 
insurance program; or 
100 STAT. 1374 
PUBLIC LAW 99-498—OCT. 17, 1986 
state and local 
' " ? ' 
* 
"(ii) there is a State constitutional prohibition affect-
governments, 
ing the eUgibility of such an institution; and 
"(U) provides (i) for the eligibihty of all lenders described 
• - 
in section 435(d)(1) under reasonable criteria, unless (I) that 
lender is eliminated as a lender under regulations for the 
limitation, suspension, or termination of a lender under the 
Federal student loan insurance program or is eliminated as 
' i 
a lender pursuant to criteria issued under the student loan 
insurance program which are substantially the same as 
regulations with respect to such eligibility as a lender 
issued under the Federal student loan insurance program, 
or (II) there is a State constitutional prohibition affecting 
the eligibility of a lender, and (ii) assurances that the 
guaranty agency will report to the Secretary concerning 
changes in such criteria, including any procedures in effect 
under such program to limit, suspend, or terminate lenders. 
"(2) CONTENTS OF INSURANCE PROGRAM AGREEMENT.—Such an 
agreement shall— 
"(A) provide that the holder of any such loan will be 
required to submit to the Secretary, at such time or times 
and in such manner as the Secretary may prescribe, state-
ments containing such information as may be required by 
or pursuant to regulation for the purpose of enabling the 
,
^ 
Secretary to determine the amount of the payment which 
must be made with respect to that loan; 
"(B) include such other provisions as may be necessary to 
protect the United States from the risk of unreasonable loss 
,, 
and promote the purpose of this part, including such provi-
sions as may be necessary for the purpose of section 437, 
? '
^
*
' i^ and as are agreed to by the Secretary and the guaranty 
agency, as the case may be; 
"(C) provide for making such reports, in such form and 
containing such information, as the Secretary may reason-
^^ 
ably require to carry out the Secretary's functions under 
this part, and for keeping such records and for affording 
such access thereto as the Secretary may find necessary to 
assure the correctness and verification of such reports; 
"(D) provide for— 
"(i) conducting, except as provided in clause (ii), 
financial and compliance audits of the guaranty agency 
at least once every 2 years and covering the period 
since the most recent audit, conducted by a qualified, 
independent organization or person in accordance with 
standards established by the Comptroller General for 
the audit of governmental organizations, programs, 
and functions, and as prescribed in regulations of the 
Secretary, the results of which shall be submitted to 
^.^ 
the Secretary; or 
i^' ""• "' 
"(ii) vvith regard to a guaranty program of a State 
which is audited under chapter 75 of title 31, United 
31 use 7501 et 
States Code, deeming such audit to satisfy the require-
seq. 
ments of clause (i) for the period of time covered by 
such audit; and 
"(E) provide that any guaranty agency may transfer 
• ii. 
loans which are insured under this part to any other guar-
anty agency with the approval of the holder of the loan and 
such other guaranty agency. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1375 
"(3) RESTRICTIONS ON INDUCEMENTS, MAILINGS, AND ADVERTIS-
ING.—A guaranty agency shall not— 
"(A) offer, directly or indirectly, premiums, payments, or 
other inducements to any educational institution or its 
employees in order to secure applicants for loans under this 
part; 
"(B) conduct unsolicited mailings to students enrolled in 
secondary school of student loan application forms; or 
"(C) conduct 
fraudulent 
or misleading 
advertising 
concerning loan availability. 
"(4) TARGETED TEACHER DEFERMENT RULE.—(A) The deferment 
State and local 
for service as a teacher in a public or nonprofit private ele- governments, 
mentary or secondary school shall be for service as such a 
teacher in shortage areas prescribed by the Secretary, in con-
sultation with the chief State school officer or, in the case of 
nonprofit private elementary or secondary schools, with appro-
priate officials of the nonprofit private schools in each State in 
accordance with this subparagraph. 
"(B) For the purpose of this paragraph, the term 'shortage 
areas' means (i) geographic areas of the State in which there is a 
shortage of elementary and secondary school teachers, and (ii) 
an area of shortage of elementary and secondary school teach-
ers in specific grade levels and in specific academic, instruc-
tional, subject matter, and discipline classifications. In carrying 
out the provisions of this subparagraph, the Secretary shall give 
special consideration to areas in which emergency certification 
of individuals in a State is being used to correct teacher short-
ages; and to States which have retirement laws permitting early 
retirement. 
"(5) SPECIAL RULE.—For the purpose of paragraph (1)(M) of 
this subsection, the Secretary shall approve any course of study 
at a foreign university that is accepted for the completion of a 
recognized international fellowship program by the adminis-
trator of such a program. 
"(6) GUARANTY AGENCY INFORMATION TRANSFERS.—(A) Prior to 
the implementation of section 485B, any guaranty agency may 
request information regarding loans made after January 1, 
1987, to students who are residents of the State for which the 
agency is the designated guarantor, from any other guaranty 
agency insuring loans to such students. 
"(B) Upon a request pursuant to subparagraph (A), a guar-
anty agency shall provide— 
"(i) the name and the social security number of the 
borrower; and 
"(ii) the amount borrowed, the cumulative amount bor-
rowed, the income reported on the loan application, and the 
purposes and the cost of attendance of the borrower. 
"(C) Any costs associated with fulfilling the request of a 
guaranty agency for information on students shall be paid by 
the guaranty agency requesting the information. 
'(c) GUARANTY AGREEMENTS FOR REIMBURSING LOSSES.— 
"(1) AUTHORITY TO ENTER INTO AGREEMENTS.—(A) The Sec-
retary may enter into a guaranty agreement with any guaranty 
agency, whereby the Secretary shall undertake to reimburse it, 
under such terms and conditions as the Secretary may estab-
lish, with respect to losses (resulting from the default of the 
student borrower) on the unpaid balance of the principal and 
100 STAT. 1376 
PUBLIC LAW 99-498—OCT. 17, 1986 
i' accrued interest of any insured loan, including the administra-
tive costs of supplemental preclaim assistance for default 
prevention as defined in paragraph (6)(C). The guaranty agency 
shall be deemed to have a contractual right against the United 
States, during the life of such loan, to receive reimbursement 
. according to the provisions of this subsection. Upon receipt of an 
•
* accurate and complete request by a guaranty agency for re-
imbursement with respect to such losses, the Secretary shall 
1' pay promptly and without administrative delay. Except as pro-
vided in subparagraph (B) of this paragraph and in paragraph 
\ : 
"- 
' (7), the amount to be paid a guaranty agency as reimbursement 
' under this subsection shall be equal to 100 percent of the 
amount expended by it in discharge of its insurance obligation 
incurred under its loan insurance program. In no case shall a 
guaranty agency file a claim under this subsection for re-
imbursement with respect to losses prior to 270 days after the 
'' loan becomes delinquent with respect to any installment 
thereon. 
"(B) Notwithstanding subparagraph (A)— 
"(i) if, for any fiscal year, the amount of such reimburse-
ment payments by the Secretary under this subsection 
exceeds 5 percent of the loans which are insured by such 
guaranty agency under such program and which were in 
repayment at the end of the preceding fiscal year, the 
amount to be paid as reimbursement under this subsection 
for such excess shall be equal to 90 percent of the amount of 
.-,. 
such excess; and 
"(ii) if, for any fiscal year, the amount of such reimburse-
,. :' 
ment payments exceeds 9 percent of such loans, the amount 
^ 
to be paid as reimbursement under this subsection for such 
J
. 
excess shall be equal to 80 percent of the amount of such 
excess. 
"(C) For the purpose of this subsection, the amount of loans of 
,,. a guaranty agency which are in repayment shall be the original 
J principal amount of loans made by a lender which are insured 
*
"
• by such a guaranty agency reduced by— 
"(i) the amount the insurer has been required to pay to 
discharge its insurance obligations under this part; 
"(ii) the original principal amount of loans insured by it 
which have been fully repaid; and 
"(iii) the original principal amount insured on those loans 
'^di 'x for which payment of the first installment of principal has 
not become due pursuant to subsection (b)(1)(E) of this 
; 
section or such first installment need not be paid pursuant 
i { 
to subsection (bXl)(M) of this section. 
"(2) CONTENTS OF GUARANTY AGREEMENTS.—The guaranty 
'"> agreement— 
"(A) shall set forth such administrative and fiscal proce-
dures as may be necessary to protect the United States 
from the risk of unreasonable loss thereunder, to ensure 
•&' 
proper and efficient administration of the loan insurance 
program, and to assure that due diligence will b*^ exercised 
ft 
in the collection of loans insured under the program, 
Oi 
including a requirement that each beneficiary of insurance 
€>.l'' . 
on the loan submit proof that reasonable attempts were 
H' 
.' 
made to locate the borrower (when the location of the 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1377 
borrower is unknown) and proof that contact was made 
with the borrower (when the location is known); 
"(B) shall provide for making such reports, in such form 
and containing such information, as the Secretary may 
reasonably require to carry out the Secretary's functions 
under this subsection, and for keeping such records and for 
affording such access thereto as the Secretary may find 
necessary to assure the correctness and verification of such 
reports; 
"(C) shall set forth adequate assurances that, with respect 
State and local 
to so much of any loan insured under the loan insurance 
governments. 
program as may be guaranteed by the Secretary pursuant 
to this subsection, the undertaking of the Secretary under 
the guaranty agreement is acceptable in full satisfaction of 
State law or regulation requiring the maintenance of a 
reserve; 
"(D) shall provide that if, after the Secretary has made 
payment under the guaranty agreement pursuant to para-
graph (1) of this subsection with respect to any loan, any 
payments are made in discharge of the obligation incurred 
by the borrower with respect to such loan (including any 
payments of interest accruing on such loan after such 
payment by the Secretary), there shall be paid over to the 
Secretary (for deposit in the fund established by section 431) 
such proportion of the amounts of such payments as is 
determined (in accordance with paragraph (6)) to represent 
his equitable share thereof, but (i) shall provide for subroga-
tion of the United States to the rights of any insurance 
beneficiary only to the extent required for the purpose of 
paragraph (8); and (ii) except as the Secretary may other-
wise by or pursuant to regulation provide, amounts so paid 
by a borrower on such a loan shall be first applied in 
reduction of principal owing on such loan; 
"(E) shall set forth adequate assurance that an amount 
equal to each pa5mient made under paragraph (1) will be 
promptly deposited in or credited to the accounts main-
tained for the purpose of section 422(c); 
"(F) set forth adequate assurances that the guaranty 
agency will not engage in any pattern or practice which 
results in a denial of a borrower's access to loans under this 
part because of the borrower's race, sex, color, religion, 
national origin, age, handicapped status, income, attend-
ance at a particular eligible institution within the area 
served by the guaranty agency, length of the borrower's 
educational program, or the borrower's academic year in 
school; and 
"(G) may include such other provisions as may be nec-
essary to promote the purpose of this part. 
"(3) FORBEARANCE.—To the extent provided in regulations of 
the Secretary, a guaranty agreement under this subsection may 
contain provisions which permit such forbearance for the bene-
fit of the student borrower as may be agreed upon by the parties 
to an insured loan and approved by the insurer. Such regula-
tions shall not preclude guaranty agencies from permitting the 
parties to such a loan from entering into a forbearance agree-
ment solely because the loan is in default. 
100 STAT. 1378 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(4) DEFINITIONS.—For the purpose of this subsection, the 
terms 'insurance beneficiary' and 'default' have the meanings 
assigned to them by section 435. 
"(5) APPLICABILITY TO EXISTING LOANS.—In the case of any 
guaranty agreement with a guaranty agency, the Secretary 
may, in accordance with the terms of this subsection, undertake 
to guarantee loans described in paragraph (1) which are insured 
by such guaranty agency and are outstanding on the date of 
execution of the guaranty agreement, but only with respect to 
.^j , 
defaults occurring after the execution of such guaranty agree-
';s 
ment or, if later, after its effective date. 
"(6) SECRETARY'S EQUITABLE SHARE.—(A) For the purpose of 
paragraph (2)(D), the Secretary's equitable share of payments 
made by the borrower shall be that portion of the payments 
remaining after the guaranty agency with which the Secretary 
has an agreement under this subsection has deducted from such 
payments— 
"(i) a percentage amount equal to the complement of the 
reinsurance percentage in effect when payment under the 
} 
guaranty agreement was made with respect to the loan; and 
r, 
"(ii) an amount equal to 30 percent of such payments 
(subject to subparagraph (D) of this paragraph) for costs 
related to the student loan insurance program, including 
the administrative costs of collection of loans reimbursed 
under this subsection, the administrative costs of preclaims 
assistance for default prevention, the administrative costs 
of supplemental preclaims assistance for default preven-
tion, and the administrative costs of monitoring the enroll-
ment and repayment status of students (as such terms are 
defined in subparagraph (B) or (C) of this paragraph). 
"(B) For the purpose of this paragraph and subsection (f) of 
this section, the term— 
"(i) 'administrative costs of collection of loans' means any 
nit 
administrative costs incurred by a guaranty agency which 
.,c 
are directly related to the collection of the loan on which a 
default claim has been paid to the participating lender, 
including the attributable compensation of collection 
/s\ 
personnel (and in the case of personnel who perform several 
functions for such an agency only the portion of the com-
pensation attributable to the collection activity), attorney's 
fees, fees paid to collection agencies, postage, equipment, 
supplies, telephone and similar charges, but does not in-
clude the overhead costs of such agency whether or not 
attributable; 
ft, 
;. 
"(ii) 'administrative costs of preclaim assistance for de-
fault prevention' means any administrative costs incurred 
-f 
by a guaranty agency which are directly related to provid-
ing collection assistance to the lender on a delinquent loan, 
?;, 
prior to the loan's being legally in a default status, includ-
ing the attributable compensation of appropriate personnel 
(and in the case of personnel who perform several functions 
for such an agency only the portion of compensation attrib-
utable to the collection activity), fees paid to locate a miss-
ing borrower, postage, equipment, supplies, telephone and 
.
:
• 
similar charges, but does not include the overhead costs of 
such agency whether or not attributable; and 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1379 
"(iii) 'administrative costs of monitoring the enrollment 
and repayment status of students' means any administra-
tive costs by a guaranty agency which are directly related 
to ascertaining the student's enrollment status, prompt 
notification to the lender of such status, an audit of the note 
or written agreement to determine if the provisions of that 
note or agreement are consistent with the records of the 
guaranty agency as to the principal amount of the loan 
guaranteed, and an examination of the note or agreement 
to assure that the repayment provisions are consistent with 
the provisions of this part, 
subject to such additional criteria as the Secretary may by 
regulation prescribe. 
"(CXi) For the purpose of this paragraph, 'administrative costs 
of supplemental preclaims assistance' means (subject to divi-
sions (ii) through (iv)) any administrative costs— 
"(I) incurred by a guaranty agency in connection with a 
loan on which the guarantor has exercised preclaims assist-
ance required or permitted under paragraph (2XA) of this 
subsection and subsection (f), and which has been in delin-
quent status for at least 120 days; and 
"(II) which are directly related to providing collection 
assistance to the lender on a delinquent loan, prior to a 
claim being filed with the guaranty agency, 
including the attributable compensation of appropriate person-
nel (and in the case of personnel who perform several functions, 
only the portion of compensation attributable to the collection 
assistance), fees paid to locate a missing borrower, postage, 
equipment, supplies, telephone, and similar charges, but does 
not include overhead costs, 
"(ii) The administrative costs for which reimbursement is 
authorized under this subparagraph must be clearly supple-
mental to the preclaim assistance for default prevention which 
the guaranty agency is required or permitted to provide pursu-
ant to paragraph (2XA) of this subsection and subsection (f). 
"(iii) The services associated with carrying out this subpara-
graph may be provided by the guaranty agency directly or 
under contract, except that such services may not be carried out 
by an organization or entity (other than the guaranty agency)— 
"(I) that is the holder or servicer of the loan or an 
organization or entity that owns or controls the holder or 
servicer of the loan; 
"(II) that is owned or controlled by the same corporation, 
partnership, association, or individual that owns or controls 
the holder or servicer of the loan; or 
"(III) that is an organization or entity that has a contract 
with a guaranty agency to perform collection activities with 
respect to the same loans in the event of default, 
"(iv) The costs for each delinquent loan associated with carry-
ing out this subparagraph may not exceed 2 percent of the 
outstanding principal balance of each such loan subject to the 
supplemental preclaims assistance authorized by this subpara-
graph or $100, whichever is less. 
"(D) In the case of a State which enacts a garnishment law 
that complies with the requirements of section 428E, subpara-
graph (A)(ii) shall be applied by substituting '35 percent' for '30 
percent'. 
Contracts. 
State and local 
governments. 
100 STAT. 1380 
PUBLIC LAW 99-498—OCT. 17, 1986 
;
> 
"(7) NEW PROGRAMS EUGIBLE FOR lOO PERCENT REINSURANCE.— 
(A) Notwithstanding paragraph (1)(B), the amount to be paid a 
guaranty agency for any fiscal year— 
"(i) which begins on or after October 1,1977; and 
"(ii) which is either the fiscal year in which such guar-
anty agency begins to actively carry on a student loan 
insurance program which is subject to a guaranty agree-
ment under subsection (b) of this section, or is one of the 4 
succeeding fiscal years, 
shall be 100 percent of the amount expended by such guaranty 
agency in discharge of its insurance obligation insured under 
such program. 
"(B) The Secretary shall continuously monitor the operations 
of those guaranty agencies to which the provisions of subpara-
graph (A) are applicable and revoke the application of such 
subparagraph to any such guaranty agency which the Secretary 
determines has not exercised reasonable prudence in the 
administration of such program. 
"(8) ASSIGNMENT TO PROTECT FEDERAL FISCAL INTEREST.—If the 
Secretary determines that the protection of the Federal fiscal 
interest so requires, a guaranty agency shall assign to the 
Secretary any loan of which it is the holder and for which the 
Secretary has made a payment pursuant to paragraph (1) of this 
subsection. 
"(9) REINSURANCE FEES.—(A) Any guaranty agency which has 
entered into an agreement with the Secretary pursuant to this 
subsection shall pay to the Secretary during each fiscal year a 
reinsurance fee in an amount equal to— 
"(i) 0.25 percent of the total principal amount of the loans 
upon which insurance was issued by such agency during 
such fiscal year, in any fiscal year other than a fiscal year 
described in clause (ii); or 
"(ii) 0.5 percent of the total principal amount of the loans 
upon which insurance was issued by such agency during 
such fiscal year, in any fiscal year with respect to which the 
^ '"" 
Secretary reimbursed the agency for any losses (resulting 
from the default of the borrower) pursuant to paragraph 
(IXB) of this subsection. 
"(B) The amount to be paid pursuant to subparagraph (A) 
may be paid from any funds available to the guaranty agency. 
"(C) When the Secretary first reimburses a guaranty agency 
pursuant to paragraph (1)(B) of this subsection, the Secretary 
shall notify such agency of the exact date of such reimburse-
ment. 
"(d) USURY LAWS INAPPUCABLE.—No provision of any law of 
the 
United States (other than this Act) or of any State (other than a 
statute applicable principally to such State's student loan insurance 
program) which limits the rate or amount of interest payable on 
loans shall apply to a loan— 
"(1) which bears interest (exclusive of any premium for insur-
ance) on the unpaid principal balance at a rate not in excess of 
the rate specified in this part; and 
"(2) which is insured (i) by the United States under this part, 
or (ii) by a guaranty agency under a program covered by an 
agreement made pursuant to subsection (b) of this section. 
"(e) PAYMENTS FOR LENDER REFERRAL SERVICES.— 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1381 
"(1) IN GENERAL.—The Secretary shall make payments in 
State and local 
accordance with this paragraph to a guaranty agency in any 
governments. 
State which provides a lender referral service for students who 
meet the requirements of paragraph (2). 
"(2) STUDENT ELIGIBILITY.—A student is eligible to apply for 
lender referral services to a guaranty agency in a State if— 
"(A) such student is either a resident of such State or is 
accepted for enrollment in or is attending an eligible 
institution in such State; and 
"(B) such student has sought and was unable to find a 
lender willing to make a loan under this part. 
"(3) AMOUNT OF PAYMENT.—The amount which the Secretary 
shall pay to any eligible guaranty agency under this paragraph 
shall be equal to one-half of 1 percent of the total principal 
amount of the loans (upon which insurance was issued under 
this part) to a student described in paragraph (2) who subse-
quently obtained such loans because of such agency's referral 
service. 
"(4) INCENTIVE FEES TO LENDERS.—Nothing in this or any law 
shall prohibit an agency from using all or any portion of the 
funds received under this part for the payment of incentive fees 
to lenders who agree to participate in a lender referral service. 
"(5) AUTHORIZATION OF APPROPRIATIONS.—There is authorized 
to be appropriated such sums as are necessary to carry out the 
provisions of this paragraph. 
'(f) PAYMENTS OF CERTAIN COSTS.— 
"(1) PAYMENTS BASED ON INSURANCE PROGRAM AGREEMENT.— 
(A) The Secretary shall make payments in accordance with the 
provisions of this paragraph to any guaranty agency for the 
purposes of— 
"(i) the administrative cost of promotion of commercial 
lender participation; 
"(ii) the administrative costs of collection of loans; 
"(iii) the administrative costs of preclaims assistance for 
default prevention; 
"(iv) the administrative costs of monitoring the enroll-
ment and repayment status of students; or 
"(v) other such costs related to the student loan insurance 
program subject to such agreement. 
"(B) The total amount of payments for any fiscal year made 
under this paragraph shall be equal to 1 percent of the total 
principal amount of the loans upon which insurance was issued 
under this part during such fiscal year by such guaranty 
agency. The guaranty agency shall be deemed to have a contrac-
tual right against the United States to receive payments accord-
ing to the provisions of this subparagraph. Payments shall be 
made promptly and without administrative delay to any guar-
anty agency submitting an accurate and complete application 
therefor under this subparagraph. 
"(2) APPLICATIONS FOR PAYMENTS.—No payment may be made 
under paragraph (1) of this subsection unless the guaranty 
agency submits to the Secretary an application at such time, at 
least annually, in such manner, and containing or accompanied 
by such information, as the Secretary may reasonably require. 
Each such application shall— 
"(A) set forth assurances that the student loan insurance 
program subject to the guaranty agreement complies with 
100 STAT. 1382 
PUBLIC LAW 99-498—OCT. 17, 1986 
„. , 
subparagraphs (A), (B),(G),(R),(S),(T), and (U) of subsection 
(b)(1); 
"(B) contain provisions designed to demonstrate the 
capability of carrying out a necessary and successful pro-
, - 
gram of collection of and preclaim assistance for the loan 
program subject to that agreement; 
P 
"(C) set forth an estimate of the costs which are eligible 
for payment under the provisions of this subsection; 
"(D) provide for such administrative and fiscal proce-
dures, including an audit, as are necessary to carry out the 
provisions of this subsection; and 
"(E) set forth assurances that the guaranty agency will 
furnish such data and information, including where nec-
^ 
essary estimates, as the Secretary may reasonably require, 
to carry out the provisions of this subsection. 
State and local 
"(g) ACTION ON INSURANCE PROGRAM AND GUARANTY AGREE-
governments. 
MENTS.—If a nonprofit private institution or organization— 
"(1) applies to enter into an agreement with the Secretary 
under subsections (b) and (c) with respect to a student loan 
insurance program to be carried on in a State with which the 
Secretary does not have an agreement under subsection (b), and 
"(2) as provided in the application, undertakes to meet the 
requirements of section 422(c)(6)(B) (i), (ii), and (iii), 
the Secretary shall consider and act upon such application within 
180 days, and shall forthwith notify the Committee on Labor and 
Human Resources of the Senate and the Committee on Education 
and Labor of the House of Representatives of his actions. 
State and local 
"(h) LENDING BY GUARANTY AGENCIES.— 
governments. 
"(1) LENDING FROM SALLIE MAE ADVANCES.—From SUmS ad-
vanced by the Association pursuant to section 439(p), each 
guaranty agency or an eligible lender in a State described in 
section 435(d)(1) (D) or (F) of the Act is authorized to make loans 
directly to students otherwise unable to obtain loans under this 
part. 
"(2) AMOUNT OF ADVANCES.—(A) Each guaranty agency or an 
eligible lender in a State described in section 435(d)(1) (D) or (F) 
which has an application approved under section 439(p)(2) may 
receive advances under section 439(p) for each fiscal year in an 
amount necessary to meet the demand for loans under this 
section. The amount such agency or lender is eligible to receive 
may not exceed 25 percent of the average of the loans guaran-
teed by that agency or lender for the 3 years preceding the fiscal 
year for which the determination is made. Whenever the deter-
mination required by the preceding sentence cannot be made 
because the agency or lender does not have 3 years previous 
experience, the amount such agency or lender is eligible to 
receive may not exceed 25 percent of the loans guaranteed 
under a program of a State of comparable size. 
"(B) Each guaranty agency and each eligible lender in a State 
described in section 435(d)(1) (D) or (F) shall repay advances 
made under section 439(p) in accordance with agreements en-
tered into between the Association and such agency or lender. 
"(3) LOAN TERM, CONDITIONS, AND BENEFITS.—Loans made 
pursuant to this subsection shall have the same terms, condi-
tions, and benefits as all other loans made under this part, 
"(i) MULTIPLE DISBURSEMENT OF LOANS.— 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1383 
"(1) ESCROW ACCOUNTS ADMINISTERED BY ESCROW AGENT.—Any 
state and local 
guaranty agency or eligible lender (hereafter in this subsection 
governments. 
referred to as the 'escrow agent') may enter into an agreement 
with any other eligible lender that is not an eligible institution 
or an agency or instrumentality of the State (hereafter in this 
subsection referred to as the 'lender') for the purpose of au- 
. 
, 
thorizing multiple disbursements of the proceeds of a loan to a 
' 
student. Such agreement shall provide that the lender will pay 
the proceeds of such loans into an escrow account to be adminis-
tered by the escrow agent in accordance with the provisions of 
paragraph (2) of this subsection. Such agreement may allow the 
lender to make pa3mtients into the escrow account in amounts 
that do not exceed the sum of the amounts required for 
disbursement of initial or subsequent installments to borrowers 
and to make such payments not more than 45 days prior to the 
date of the disbursement of such installment to such borrowers. 
Such agreement shall require the lender to notify promptly the 
eligible institution when funds are escrowed under this subsec- 
^ , f 
tion for a student at such institution. 
"(2) AUTHORITY OF ESCROW AGENT.—Each escrow agent enter-
ing into an agreement under paragraph (1) of this subsection is 
authorized to— 
"(A) make the disbursements in accordance with the note 
evidencing the loan; 
"(B) commingle the proceeds of all loans paid to the 
escrow agent pursuant to the escrow agreement entered 
into under such paragraph (1); 
"(C) invest the proceeds of such loans in obligations of the 
Federal Government or obligations which are insured or 
guaranteed by the Federal Government; 
"(D) retain interest or other earnings on such investment; 
and 
"(E) return to the lender undisbursed funds when the 
student ceases to carry at an eligible institution at least 
one-half of the normal full-time academic workload as 
determined by the institution. 
"(j) LENDERS-OF-LAST-RESORT.—In each State, the guaranty agency 
State and local 
or an eligible lender in the State described in section 435(d)(1)(D) of governments, 
this Act shall make loans directly, or through an agreement with an 
eligible lender or lenders, to students eligible to receive interest 
benefits paid on their behalf under subsection (a) of this section who 
are otherwise unable to obtain loans under this part. Loans made 
under this subsection shall not exceed the amount of the need of the 
borrower, as determined under subsection (a)(2)(B), nor be less than 
$200. 
"(k) INFORMATION ON DEFAULTS.— 
"(1) PROVISION OF INFORMATION TO ELIGIBLE INSTITUTIONS.—In 
order to notify eligible institutions of former students who are 
in default of their continuing obligation to repay student loans, 
each guaranty agency may, upon the request of an eligible 
institution, furnish information with respect to students who 
were enrolled at the eligible institution and who are in default 
on the repayment of any loan made, insured, or guaranteed 
under this part. The information authorized to be furnished 
under this subsection may include the names and addresses of 
such students. 
100 STAT. 1384 
PUBLIC LAW 99-498—OCT. 17, 1986 
.pi ., ry , 
, 
' 
"(2) 
PUBLIC DISSEMINATION NOT AUTHORIZED.—Nothing 
in 
v„, 
paragraph (1) of this subsection shall be construed to authorize 
public dissemination of the information described in paragraph 
(1). 
"SUPPLEMENTAL LOANS FOR STUDENTS 
20 use 1078-1. 
"SEC. 428A. (a) AUTHORITY TO BORROW.—Graduate and profes-
sional students (as defined by regulations of the Secretary) and 
undergraduate independent students shall be eligible to borrow 
funds under this section in amounts specified in subsection (b), and 
unless otherwise specified in subsections (c) and (d), loans under this 
section shall have the same terms, conditions, and benefits as all 
other loans made under this part, 
"(b) LIMITATIONS ON AMOUNTS OF LOANS.— 
"(1) ANNUAL LIMIT.—Subject to paragraphs (2) and (3), the 
maximum amount a student may borrow in any academic year 
or its equivalent (as defined by regulation by the Secretary) is 
$4,000. 
Insurance. 
"(2) AGGREGATE LIMIT.—The aggregate insured principal 
amount for insured loans made to any student under this 
section, exclusive of interest capitalized under subsection (c), 
shall not exceed $20,000. 
"(3) 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 loans may be 
made to any student under this section which would cause the 
student's combined loans for any academic year to exceed the 
student's estimated cost of attendance minus such student's 
estimated financial assistance as certified by the eligible institu-
tion under section 428(aX2XA) of this part. The annual insurable 
limit on account of the student shall not be deemed to be 
exceeded by a line of credit under which actual payments to the 
borrower will not be made in any year in excess of the annual 
limit. 
"(c) PAYMENT OF PRINCIPAL AND INTEREST.— 
"(1) COMMENCEMENT OF REPAYMENT.—Repayment of principal 
on loans made under this section shall commence not later than 
. - 
60 days after the date such loan is disbursed by the lender, 
subject to deferral pursuant to sections 427(a)(2)(C) and 
428(bXl)(M). 
"(2) CAPITAUZATION OF INTEREST.—Interest on loans made 
under this section for which payments of principal and interest 
are deferred under sections 427(aX2XCXi) and 428(bXlXMXi) 
shall, if agreed upon by the borrower and the lender (A) be paid 
quarterly or (B) be added to the principal amount of the loan on 
a quarterly basis by the lender. Such capitalization of interest 
shall not be deemed to exceed the annual insurable limit on 
account of the student. 
"(3) SUBSIDIES PROHIBITED.—No payments to reduce interest 
costs shall be paid pursuant to section 428(a) of this part on 
loans made pursuant to this section. 
"(4) APPLICABLE RATES OF INTEREST.—Interest on loans made 
pursuant to this section shall be at the applicable rate of 
interest provided in section 427A(c). 
"(5) AMORTIZATION.—The amount of the periodic payment and 
the repayment schedule for any loan made pursuant to this 
section shall be established by assuming an interest rate equal 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1385 
to the applicable rate of interest at the time the repayment of 
the principal amount of the loan commences. At the option of 
the lender, the note or other written evidence of the loan may 
require that— 
"(A) the amount of the periodic payment will be adjusted 
annually, or 
"(B) the period of repayment of principal will be length-
ened or shortened, 
in order to reflect adjustments in interest rates occurring as a 
consequence of section 427A(c)(4). 
"(d) REFINANCING.— 
"(1) REFINANCING TO SECURE COMBINED PAYMENT.—An eligible 
lender may consolidate loans held by it which are made under 
this section to a borrower, including loans which were made 
under section 428B as in effect prior to the enactment of the 
Higher Education Amendments of 1986, under a single repay-
ment schedule which provides for a single principal payment 
and a single payment of interest, and shall calculate the repay-
ment period for each included loan from the date of the 
commencement of repayment of the most recent included loan. 
Unless the borrower complies with the requirements of para-
graph (2), such consolidated loan shall bear interest at the 
weighted average of the rates of all included loans. The exten-
sion of any repayment period of an included loan pursuant to 
this paragraph shall be reported to the Secretary or guaranty 
agency insuring the loan, as the case may be, but no additional 
. . . . 
insurance premiums shall be payable with respect to any such 
extension. The extension of the repayment period of any in-
cluded loan shall not require the formal extension of the 
promissory note evidencing the included loan or the execution 
of a new promissory note, but shall be treated as an administra-
tive forbearance of the repayment terms of the included loan. 
"(2) REFINANCING TO SECURE VARIABLE INTEREST RATE.—An 
eligible lender may reissue a loan which was made under 
section 428B as in effect prior to the enactment of the Higher 
Education Amendments of 1986 in order to permit the borrower 
to obtain the interest rate provided under section 427A(c)(4). A 
lender offering to reissue a loan for such purpose may charge a 
borrower an amount not to exceed $100 to cover the administra-
tive costs of reissuing such loan, not more than one-half of 
which shall be paid to the guarantor of the loan being reissued 
to recover costs of reissuance. Reissuance of a loan under this 
paragraph shall not affect any insurance applicable with re-
spect to the loan, and no additional insurance fee may be 
charged to the borrower with respect to the loan. 
"(3) REFINANCING BY DISCHARGE OF PREVIOUS LOAN.—A bor-
rower who has applied to an original lender for reissuance of a 
loan under paragraph (2) and who is denied such reissuance 
may obtain a loan from another lender for the purpose of 
discharging the loan from such original lender. A loan made for 
such purpose— 
"(A) shall bear interest at the applicable rate of interest 
provided under section 427A(c)(4); 
"(B) shall not result in the extension of the duration of 
' 
the note (other than as permitted under subsection (c)(5)(B)); 
100 STAT. 1386 
PUBLIC LAW 99-498—OCT. 17, 1986 
i' 
- 
"(C) may be subject to an additional insurance fee but 
shall not be subject to the administrative cost charge per-
mitted by paragraph (2) of this subsection; and 
"(D) shall be applied to discharge the borrower from any 
K -, 
remaining obligation to the original lender with respect to 
the original loan. 
"(4) 
CERTIFICATION IN UEU OF PROMISSORY NOTE PRESEN-
TATION.—Each new lender may accept certification from the 
original lender of the borrower's original loan in lieu of presen-
tation of the original promissory note. 
"(5) 
NOTIFICATION TO BORROWERS OF AVAILABILITY OF RE-
FINANCING OPTIONS.—Each holder of a loan made under this 
section or under section 428B as in effect prior to the date of 
enactment of this Act shall, not later than January 1, 1987, in 
the case of loans made before the date of enactment of this Act, 
notify the borrower of such loan— 
"(A) of the refinancing options for which the borrower is 
eligible under this subsection; 
"(B) of those options which will be made available by the 
holder; and 
"(C) that, with respect to any option that the holder will 
not make available, the holder will, to the extent prac-
ticable, refer the borrower to an eligible lender offering 
such option. 
"PLUS LOANS 
,V 
/ 
20 use 1078-2. 
"SEC. 428B. (a) AUTHORITY TO BORROW.—Parents of a dependent 
student shall be eligible to borrow funds under this section in 
amounts specified in subsection (b), and unless otherwise specified in 
subsections (c) and (d), such loans -shall have the same terms, 
conditions, and benefits as all other loans made under this part. 
Whenever necessary to carry out the provisions of this section, the 
terms 'student' and 'borrower' as used in this part shall include a 
parent borrower under this section, but such a parent borrower 
shall not be eligible for any deferment pursuant to section 
427(a)(2)(C) or 428(b)(l)(M) except for the deferments allowed (with 
respect to the student) under clauses (i), (viii), and (ix) of such 
sections. 
"(b) LIMITATIONS ON AMOUNTS OF LOANS.— 
"(1) ANNUAL LIMIT.—Subject to paragraphs (2) and (3), the 
maximum amount parents may borrow for one student in any 
academic year or its equivalent (as defined by regulation of the 
Secretary) is $4,000. 
"(2) AGGREGATE LIMIT.—The aggregate insured principal 
amount for insured loans made to parents on account of a 
student shall not exceed $20,000. 
"(3) 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 which would cause the 
combined loans of the parent and the student for any academic 
year to exceed the student's estimated cost of attendance minus 
'5 
such student's estimated financial assistance as certified by the 
eligible institution under section 428(a)(2)(A) of this part. The 
annual insurable limit on account of any student shall not be 
deemed to be exceeded by a line of credit under which actual 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1387 
payments to the borrower will not be made in any year in excess 
of the annual limit. 
"(c) PAYMENT OF PRINCIPAL AND INTEREST.— 
"(1) COMMENCEMENT OF REPAYMENT.—Repayment of principal 
on loans made under this section shall commence not later than 
60 days after the date such loan is disbursed by the lender, 
subject to deferral pursuant to sections 427(a)(2)(C) (i), (viii), and 
(ix) and 428(b)(l)(M) (i), (viii), and (ix). 
"(2) CAPITALIZATION OF INTEREST.—Interest on loans made 
under this section for which payments of principal and interest 
are deferred under sections 427(a)(2)(C)(i) and 428(b)(l)(M)(i) 
shall, if agreed upon by the borrower and the lender (A) be paid 
quarterly or (B) be added to the principal amount of the loan on 
a quarterly basis by the lender. Such capitalization of interest 
shall not be deemed to exceed the annual insurable limit on 
account of the student. 
"(3) SUBSIDIES PROHIBITED.—No payments to reduce interest 
costs shall be paid pursuant to section 428(a) of this part on 
loans made pursuant to this section. 
"(4) APPUCABLE RATES OF INTEREST.—Interest on loans made 
pursuant to this section shall be at the applicable rate of 
interest provided in section 427A(c). 
"(5) AMORTIZATION.—The amount of the periodic payment and 
the repayment schedule for any loan made pursuant to this 
section shall be established by assuming an interest rate equal 
to the applicable rate of interest at the time the repayment of 
the principal amount of the loan commences. At the option of 
the lender, the note or other written evidence of the loan may 
require that— 
"(A) the amount of the periodic payment will be adjusted 
annually, or 
"(B) the period of repayment of principal will be length-
ened or shortened, 
in order to reflect adjustments in interest rates occurring as a 
consequence of section 427A(c)(4). 
"(d) REFINANCING.— 
"(1) REFINANCING TO SECURE COMBINED PAYMENT.—An eligible 
lender may consolidate loans held by it which are made under 
this section to a borrower, including loans which were made 
under section 428B as in effect prior to the enactment of the 
Higher Education Amendments of 1986, under a single repay-
ment schedule which provides for a single principal payment 
and a single payment of interest, and shall calculate the repay-
ment period for each included loan from the date of the 
commencement of repayment of the most recent included loan. 
Unless the borrower complies with the requirements of para-
graph (2), such consolidated loan shall bear interest at the 
weighted average of the rates of all included loans. The exten-
sion of any repayment period of an included loan pursuant to 
this paragraph shall be reported to the Secretary or guaranty 
agency insuring the loan, as the case may be, but no additional 
* *' • 
insurance premiums shall be payable with respect to any such 
extension. The extension of the repayment period of any in-
cluded loan shall not require the formal extension of the 
promissory note evidencing the included loan or the execution 
of a new promissory note, but shall be treated as an administra-
tive forbearance of the repa5mient terms of the included loan. 
100 STAT. 1388 
PUBLIC LAW 99-498—OCT. 17, 1986 
"' 
"(2) REFINANCING TO SECURE VARIABLE INTEREST RATE.—An 
eligible lender may reissue a loan which was made under 
section 428B as in effect prior to the enactment of the Higher 
Education Amendments of 1986 in order to permit the borrower 
to obtain the interest rate provided under section 427A(cX4). A 
lender offering to reissue a loan for such purpose may charge a 
borrower an amount not to exceed $100 to cover the administra-
tive costs of reissuing such loan, not more than one-half of 
which shall be paid to the guarantor of the loan being reissued 
to cover costs of reissuance. Reissuance of a loan under this 
paragraph shall not affect any insurance applicable with re-
spect to the loan, and no additional insurance fee may be 
charged to the borrower with respect to the loan. 
"(3) REFINANCING BY DISCHARGE OF PREVIOUS LOAN.—A bor-
rower who has applied to an original lender for reissuance of a 
loan under paragraph (2) and who is denied such reissuance 
may obtain a loan from another lender for the purpose of 
discharging the loan from such original lender. A loan made for 
such purpose— 
"(A) shall bear interest at the applicable rate of interest 
' • 
provided under section 427A(cX4); 
"(B) shall not result in the extension of the duration of 
the note (other than as permitted under subsection (cX5XB)); 
"(C) may be subject to an additional insurance fee but 
shall not be subject to the administrative cost charge per-
mitted by paragraph (2) of this subsection; and 
"(D) shall be applied to discharge the borrower from any 
remaining obligation to the original lender with respect to 
the original loan. 
- 
"(4) 
CERTIFICATION IN UEU OF PROMISSORY NOTE PRESEN-
TATION.—Each new lender may accept certification from the 
original lender of the borrower's original loan in lieu of presen-
tation of the original promissory note. 
"(5) 
NOTIFICATION TO BORROWERS OF AVAILABIUTY OF RE-
FINANCING OPTIONS.—Each holder of a loan made under this 
section or under section 428B as in effect prior to the date of 
enactment of this Act shall, not later than January 1, 1987, in 
the case of loans made before the date of enactment of this Act, 
notify the borrower of such loan— 
"(A) of the refinancing options for which the borrower is 
eligible under this subsection; 
"(B) of those options which will be made available by the 
holder; and 
"(C) that, with respect to any option that the holder will 
not make available, the holder will, to the extent prac-
ticable, refer the borrower to an eligible lender offering 
such option. 
"CONSOUDATION LOANS 
20 use 1078-3. 
"SEC 428C. (a) AGREEMENTS WITH EUGIBLE LENDERS.— 
"(1) AGREEMENT REQUIRED FOR INSURANCE COVERAGE.—For 
the purpose of providing loans to eligible borrowers for consoli-
dation of their obligations with respect to eligible student loans, 
the Secretary or a guaranty agency shall enter into agreements 
in accordance with subsection (b) with the following eligible 
lenders: 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1389 
"(A) the Student Loan Marketing Association; 
"(B) State agencies described in subparagraphs (D) and 
(F) of section 435(dXl); and 
"(C) other eligible lenders described in subparagraphs (A), 
(B), (C), and (E) of such section. 
"(2) INSURANCE COVERAGE OF CONSOLIDATION LOANS.—Except 
Contracts, 
as provided in section 429(e), no contract of insurance under this 
part shall apply to a consolidation loan unless such loan is made 
under an agreement pursuant to this section and is covered by a 
certificate issued in accordance with subsection (b)(2). Loans 
covered by such a certificate that is issued by a guaranty agency 
shall be considered to be insured loans for the purposes of 
reimbursements under section 428(c), but no payment shall be 
made with respect to such loans under section 428(f) to any such 
agency. 
"(3) DEFINITION OF EUGIBLE BORROWER.—(A) For the purpose 
of this section, the term 'eligible borrower' means a borrower 
who, at the time of application for a consolidation loan— 
"(i) has an outstanding indebtedness on eligible student 
loans, at the time of application for a consolidation loan, of 
not less than $5,000; 
"(ii) is in repayment status, or in a grace period preceding 
repayment, and is not delinquent with respect to any re-
quired payment on such indebtedness by more than 90 
days; and 
"(iii) is not a parent borrower under section 428B. 
"(B) An individual's status as an eligible borrower under this 
section terminates upon receipt of a consolidation loan under 
this section except with respect to loans received under this title 
after the date of receipt of the consolidation loan. Loans made 
under this section shall, to the extent used to discharge loans 
made under this part, be counted against the applicable limita-
tions on aggregate indebtedness contained in sections 425(a)(2) 
and 428(bXlXB). 
"(4) DEFINITION OF EUGIBLE STUDENT LOANS.—For the purpose 
of paragraph (1), the term 'eligible student loans' means loans— 
"(A) made, insured, or guaranteed under this part; 
"(B) made under part E of this title; or 
"(C) made under subpart II of part C of title VII of the 
Public Health Service Act. 
42 USC 294m. 
"(b) CONTENTS OF AGREEMENTS, CERTIFICATES OF INSURANCE, AND 
LOAN NOTES.— 
"(1) AGREEMENTS WITH LENDERS.—Any lender described in 
subparagraph (A), (B), or (C) of subsection (a)(1) who wishes to 
,, make consolidation loans under this section shall enter into an 
agreement with the Secretary or a guaranty agency which 
provides— 
"(A) that, in the case of all lenders described in subsec-
tion (aXD, the lender will make a consolidation loan to an 
eligible borrower (on request of that borrower) only if the 
9^. 
borrower certifies that the borrower has no other applica-
tion pending for a loan under this section and (i) the lender 
« 
holds an outstanding loan of that borrower which is se-
lected by the borrower for consolidation under this section, 
or (ii) the borrower certifies that the borrower has sought 
and has been unable to obtain a consolidation loan from the 
100 STAT. 1390 
PUBLIC LAW 99-498—OCT. 17, 1986 
holders of the outstanding loans of that borrower (which 
ha& X are so selected for consolidation); 
"(B) that each consolidation loan made by the lender will 
•A) • bear interest, and be subject to repayment, in accordance 
with subsection (c); 
siiii :' O 
'i 
'(C) that each consolidation loan will be made, notwith-
standing any other provision of this part limiting the 
annual or aggregate principal amount for all insured loans 
made to a borrower, in an amount (i) which is not less than 
the minimum amount required for eligibility of the bor-
rower under subsection (a)(2), and (ii) which is equal to the 
sum of the unpaid principal and accrued unpaid interest 
and late charges of all loans received by the eligible bor-
rower under this title which are selected by the borrower 
for consolidation; 
£,,,,.. 
"(D) that the proceeds of each consolidation loan will be 
,'X 
paid by the lender to the holder or holders of the loans so 
selected to discharge the liability on such loans; 
"(E) such other terms and conditions as the Secretary or 
the guaranty agency may specifically require of the lender 
to carry out this section. 
"(2) ISSUANCE OF CERTIFICATE OF COMPREHENSIVE INSURANCE 
COVERAGE.—The Secretary shall issue a certificate of com-
prehensive insurance coverage under section 429(b) to a lender 
which has entered into an agreement with the Secretary under 
paragraph (1) of this subsection. The guaranty agency may issue 
a certificate of comprehensive insurance coverage to a lender 
with which it has an agreement under such paragraph. The 
Secretary shall not issue a certificate to a lender described in 
subparagraph (B) or (C) of subsection (a)(1) unless the Secretary 
determines that such lender has first applied to, and has been 
denied a certificate of insurance by, the guaranty agency which 
; insures the preponderance of its loans (by value). 
- 
"(3) CONTENTS OF CERTIFICATE.—A certificate issued under 
paragraph (2) shall, at a minimum, provide— 
Sc 
"(A) that all consolidation loans made by such lender in 
conformity with the requirements of this section will be 
insured by the Secretary or the guaranty agency (which-
ever is applicable) against loss of principal and interest; 
?«3 K 
"(B) that a consolidation loan will not be insured unless 
> ?• J S
i
^
^ 
the lender has determined to its satisfaction, in accordance 
an A ' with reasonable and prudent business practices, for each 
loan being consolidated— 
{
1 
"(i) that the loan is a legal, valid, and binding obliga-
i • 
tion of the borrower; 
lii 
"(ii) that each such loan was made and serviced in 
n: 
compliance with applicable laws and regulations; and 
"(iii) in the case of loans under this part, that the 
.
V 
insurance on such loan is in full force and effect; 
"(C) the effective date and expiration date of the certifi-
cate; 
"(D) the aggregate amount to which the certificate 
1^ 
applies; 
-^f. 
"(E) the reporting requirements of the Secretary on the 
lender and an identification of the office of the Department 
of Education or of the guaranty agency which will process 
claims and perform other related administrative functions; 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1391 
"(F) the alternative repayment terms which will be of-
fered to borrowers by the lender; 
"(G) that, if the lender prior to the expiration of the 
certificate no longer proposes to make consolidation loans, 
the lender will so notify the issuer of the certificate in order 
that the certificate may be terminated (without affecting 
the insurance on any consolidation loan made prior to such 
termination); and 
"(H) the terms upon which the issuer of the certificate 
may limit, suspend, or terminate the lender's authority to 
make consolidation loans under the certificate (without 
affecting the insurance on any consolidation loan made 
prior to such limitation, suspension, or termination). 
"(4) TERMS AND CONDITIONS OF LOANS.—A consolidation loan 
made pursuant to this section shall be insurable by the Sec-
retary or a guaranty agency pursuant to paragraph (2) only if 
the loan is made to an eligible borrower who has agreed to 
notify the holder of the loan promptly concerning any change of 
address and the loan is evidenced by a note or other written 
agreement which— 
"(A) is made without security and without endorsement, 
except that if 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, endorse-
ment may be required; 
"(B) provides for the pa3mient of interest and the repay-
ment of principal in accordance with subsection (c) of this 
section; 
"(C) provides that periodic installments of principal need 
not be paid, but interest shall accrue and be paid, during 
any period for which the borrower would be eligible for a 
deferral under clause (i), (viii), or (ix) of section 428(b)(lXM), 
and that any such period shall not be included in determin-
ing the repayment period pursuant to subsection (cX2) of 
this section; 
"(D) entitles the borrower to accelerate without penalty 
repayment of the whole or any part of the loan; and 
"(EXi) contains a notice of the system of disclosure 
concerning such loan to credit bureau organizations under 
section 430A, and (ii) provides that the lender on request of 
the borrower will provide information on the repayment 
status of the note to such organizations. 
'(c) PAYMENT OF PRINCIPAL AND INTEREST.— 
"(1) INTEREST RATES.—(A) Consolidation loans made under this 
section shall bear interest at rates determined under subpara-
graph (B) or (C). For the purposes of payment of special allow-
ances under section 438(bX2), the interest rate required by this 
subsection is the applicable interest rate with respect to a 
consolidation loan. 
"(B) Except as provided in subparagraph (C), a consolidation 
loan shall bear interest at an annual rate on the unpaid prin-
cipal balance of the loan which is equal to the weighted average 
of the interest rates on the loans consolidated, rounded to the 
nearest whole percent. 
"(C) A consolidation loan shall bear interest at an annual rate 
on the unpaid principal balance of the loan equal to not less 
than 9 percent. 
100 STAT. 1392 
PUBLIC LAW 99-498—OCT. 17, 1986 
-hi 
"(2) REPAYMENT SCHEDULES.—(A) Notwithstanding any other 
provision of this part, to the extent authorized by its certificate 
of insurance under subsection (bX2)(F) and approved by the 
issuer of such certificate, the lender of a consolidation loan shall 
establish repayment terms as will promote the objectives of this 
section, which may include the establishment of graduated or 
income sensitive repayment schedules. Such repayment terms 
shall require that if the sum of the consolidation loan and the 
amount outstanding on other student loans to the individual— 
"(i) is equal to or greater than $5,000 but 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; 
-jiij. 
"(iv) is equal to or greater than $20,000 but less than 
$45,000, then such consolidation loan shall be repaid in not 
more than 20 years; or 
"(v) is more than $45,000, then such consolidation loan 
shall be repaid in not more than 25 years. 
"(B) Unless a consolidation loan under subparagraph (A)(ii) 
will be used to discharge at least $5,000 of loans made under 
this part, such loan shall be repaid in accordance with subpara-
graph (AXi). 
"(C) The amount outstanding on other student loans which 
may be counted for the purpose of subparagraph (A) may not 
exceed the amount of the consolidation loan. 
"(3) ADDITIONAL REPAYMENT REQUIREMENTS.—Notwithstand-
ing paragraph (2)— 
"(A) a repajrment schedule established with respect to a 
i,, 
consolidation loan shall require that the minimum install-
ment payment equal to not less than the accrued unpaid 
V 4f, -; 
interest; and 
"(B) the lender of a consolidation loan may, with respect 
to repayment on the loan, when the amount of a monthly or 
other similar payment on the loan is not a multiple of $5, 
round the payment to the next highest whole dollar amount 
that is a multiple of $5. 
"(4) COMMENCEMENT OF REPAYMENT.—Repayment of a consoli-
dation loan shall commence within 60 days after all holders 
have, pursuant to subsection (b)(1)(D), discharged the liability of 
the borrower on the loans selected for consolidation. 
"(5) INSURANCE PREMIUMS PROHIBITED.—No insurance pre-
mium shall be charged to the borrower on any consolidation 
loan, and no insurance premium shall be payable by the lender 
to the Secretary with respect to any such loan. 
"(d) TERMINATION OF AUTHORITY.—The authority to make loans 
under this section expires at the close of September 30, 1992. 
Nothing in this section shall be construed to authorize the Secretary 
to promulgate rules or regulations governing the terms or conditions 
of the agreements and certificates under subsection (b). Loans made 
under this section which are insured by the Secretary shall be 
considered to be new loans made to students for the purpose of 
section 424(a). 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1393 
"COMMINGUNG OF FUNDS 
"SEC. 428D. Notwithstanding any other provision of this part 
20 use 1078-4. 
regarding permissible uses of funds from any source, funds received 
by a guaranty agency under any provision of this part may be 
commingled with funds received under any other provision of this 
part and may be used to carry out the purposes of such other 
provision, except that— 
"(1) the total amount expended for the purposes of such other 
provision shall not exceed the amount the guaranty agency 
would otherwise be authorized to expend; and 
"(2) the authority to commingle such funds shall not relieve 
such agency of any accounting or auditing obligations under 
this part. 
"STATE GARNISHMENT LAW REQUIREMENTS 
"SEC. 428E. (a) REQUIREMENTS FOR ADDITIONAL COST PAYMENTS.— 
20 use 1078-5. 
A garnishment law complies with the requirements of this section if 
such law— 
"(1) provides that the amount deducted for any pay period 
may not exceed 10 percent of disposable pay, except that a 
greater percentage may be deducted upon the written consent of 
the individual involved; 
fjk; 
"(2) provides the individual with a minimum of 30 days 
written notice, informing such individual of the nature and 
amount of the indebtedness determined by such agency to be 
due, the intention of the agency to initiate proceedings to collect 
the debt through deductions from pay, and an explanation of 
the rights of the individual under such law; 
"(3) provides the individual with an opportunity to inspect 
and copy records relating to the debts; 
"(4) provides the individual with an opportunity to enter into 
a written agreement with the agency, under terms agreeable to 
the head of the agency or his designee, to establish a schedule 
for the repayment of the debt; 
"(5) provides the individual with an opportunity for a hearing 
in accordance with subsection O
b
) on the determination of the 
agency concerning the existence or the amount of the debt, and 
in the case of an individual whose repayment schedule is estab-
lished other than by a written agreement pursuant to para-
graph (4), concerning the terms of the repayment schedule, but 
does not permit additional administrative or judicial procedures 
that would delay collection of the debt (such as reduction of the 
debt to a judgment); 
"(6) provides that the employer will be held liable to the 
agency for any amount which such employer fails to withhold 
l 
from wages due an employee following receipt by such employer 
of proper notice under paragraph (2), but such employer shall 
not be required to vary the normal pay and disbursement cycles 
in order to comply with this paragraph; and 
"(7) provides for the imposition of a fine against any employer 
who discharges from employment, refuses to employ, or takes 
disciplinary action against any individual subject to wage 
withholding required by this section because of the existence of 
such withholding and the obligations or additional obligations 
which it imposes upon the employer. 
100 STAT. 1394 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(b) HEARING REQUIREMENTS.—A hearing described in subsection 
(a)(5) shall be provided if the individual, on or before the 15th day 
* 
' 
following receipt of the notice described in subsection (a)(2), and in 
accordance with such procedures as the head of the agency may 
prescribe, files a petition requesting such a hearing. The timely 
filing of a petition for hearing shall stay the commencement of 
collection proceedings. A hearing under subsection (a)(5) may not be 
conducted by an individual under the supervision or control of the 
head of the agency, except that nothing in this sentence shall be 
construed to prohibit the appointment of an administrative law 
judge. The hearing official shall issue a final decision at the earliest 
practicable date, but not later than 60 days after the filing of the 
petition requesting the hearing. 
"(c) NOTICE REQUIREMENTS.—The notice given to the employer 
pursuant to subsection (a)(2) shall contain only such information as 
may be necessary for the employer to comply with the withholding 
order. 
"(d) DEFINITION.—For the purpose of this section, the term 'dispos-
able pay' means that part of pay of any individual remaining after 
the deduction of any amounts required by law to be withheld. 
"REHABIUTATION OF DEFAULTED LOANS 
20 use 1078-6. 
"SEC. 428F. (a) AUTHORITY TO ESTABLISH PILOT PROGRAM.—The 
Secretary shall, in accordance with the requirements of this section, 
establish a pilot program to test the feasibility of rehabilitating 
defaulted loans under this part. Such pilot program shall be com-
menced within 3 months after the date of enactment of this section 
and shall be completed not later than 3 years after such date. The 
Secretary shall submit a report on the results of such pilot program 
within 3 months after its completion. 
"(b) ELIGIBILITY FOR PILOT PROGRAM.—The loans which shall be 
eligible for rehabilitation under this section shall be only those 
loans which are made to borrowers who, at the time of default on 
the loan, are unemployed or institutionalized. 
"(c) METHOD OF REHABIUTATION.— 
"(1) SALE OF LOAN PURSUANT TO AGREEMENT.—Upon securing 
consecutive payments for 12 months of amounts owed on a loan 
for which the Secretary has made a payment under section 
428(c)(1), the guaranty agency (pursuant to an agreement with 
the Secretary) or the Secretary shall, if practicable, sell the 
rehabilitated loan to an eligible lender, other than an eligible 
lender who has been found by the guaranty agency or the 
;^ Secretary to have substantially failed to exercise the due dili-
gence required of lenders under this part. 
"(2) TERMS OF AGREEMENT.—Such agreement between the 
guaranty agency and the Secretary shall provide— 
"(A) for the repa3anent by the agency to the Secretary of 
81.5 percent of the amount of the principal balance 
outstanding at the time of such sale multiplied by a 
percentage amount equal to the reinsurance percentage in 
effect when payment under the guaranty agreement was 
made with respect to the loan; and 
"(B) for the reinstatement by the Secretary (I) of the 
obligation to reimburse such agency for the amount ex-
pended by it in discharge of its insurance obligation under 
its loan insurance program, and (II) of the obligation to pay 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1395 
to the holder of the rehabilitated loan a special allowance 
pursuant to section 438. 
"(3) PROCEEDS OF SALES OFFSET AGAINST DEFAULT CLAIMS.— 
Amounts received by the Secretary pursuant to the sale of 
rehabilitated loans by a guaranty agency under this paragraph 
shall be deducted from the calculations of the amount of claims 
for reimbursement filed by the agency under section 428(c)(1) 
for the fiscal year in which the amount was received, notwith-
standing the fact that the default occurred in a prior fiscal year. 
"(4) EFFECT OF REHABILITATION ON BORROWER EUGIBILITY.— 
Any borrower whose loan is rehabilitated under this subsection 
shall not be precluded by section 484 from receiving additional 
assistance under this title (for which he or she is otherwise 
eligible) on the basis of defaulting on the loan prior to 
rehabilitation. 
"(5) APPUCABILITY OF OTHER TERMS, CONDITIONS, AND BENE-
FITS.—A loan which is rehabilitated under this paragraph shall 
be subject to the same terms and conditions and qualify for the 
same benefits and privileges as other loans made under this 
part. 
"CERTIFICATE OF FEDERAL LOAN INSURANCE—EFFECTIVE DATE OF 
INSURANCE 
'SEC. 429. (a) LOAN-BY-LOAN INSURANCE.— 
20 use 1079. 
"(1) AUTHORITY TO ISSUE CERTIFICATES ON APPLICATION.—If, 
upon application by an eligible lender, made upon such form, 
containing such information, and supported by such evidence as 
the Secretary may require, and otherwise in conformity with 
this section, the Secretary finds that the applicant has made a 
loan to an eligible student which is insurable under the provi-
sions of this part, he may issue to the applicant a certificate of 
insurance covering the loan and setting forth the amount and 
terms of the insurance. 
"(2) EFFECTIVENESS OF CERTIFICATE.—Insurance evidenced by a 
certificate of insurance pursuant to subsection (a)(1) shall 
become effective upon the date of issuance of the certificate, 
except that the Secretary is authorized, in accordance with 
regulations, to issue commitments with respect to proposed 
loans, or with respect to lines (or proposed lines) of credit, 
submitted by eligible lenders, and in that event, upon compli-
ance with subsection (aXD by the lender, the certificate of 
insurance may be issued effective as of the date when any loan, 
or any payment by the lender pursuant to a line of credit, to be 
covered by such insurance was made. Such insurance shall 
cease to be effective upon 60 days' default by the lender in the 
payment of any installment of the premiums payable pursuant 
to subsection (c). 
"(3) CONTENTS OF APPUCATIONS.—An application submitted 
pursuant to subsection (aXl) shall contain (A) an agreement by 
the applicant to pay, in accordance with regulations, the pre-
miums fixed by the Secretary pursuant to subsection (c), and (B) 
an agreement by the applicant that if the loan is covered by 
insurance the applicant will submit such supplementary reports 
and statement during the effective period of the loan agree-
ment, upon such forms, at such times, and containing such 
71-194 0 - 8 9 - 1 1 
: QL. 3 Part2 
100 STAT. 1396 
PUBLIC LAW 99-498—OCT. 17, 1986 
information as the Secretary may prescribe by or pursuant to 
regulation. 
"(b) COMPREHENSIVE INSURANCE COVERAGE CERTIFICATE.— 
"(1) ESTABLISHMENT OF SYSTEM BY REGULATION.—In lieu of 
requiring a separate insurance application and issuing a sepa-
rate certificate of insurance for each student loan made by an 
eligible lender as provided in subsection (a), the Secretary may, 
in accordance with regulations consistent with section 424, issue 
to any eligible lender applying therefor a certificate of com-
prehensive insurance coverage which shall, without further 
action by the Secretary, insure all insurable loans made by that 
lender, on or after the date of the certificate and before a 
specified cutoff date, within the limits of an aggregate maxi-
mum amount stated in the certificate. Such regulations may 
provide for conditioning such insurance, with respect to any 
loan, upon compliance by the lender with such requirements (to 
be stated or incorporated by reference in the certificate) as in 
the Secretary's judgment will best achieve the purpose of this 
subsection while protecting the United States from the risk of 
unreasonable loss and promoting the objectives of this part, 
including (but not limited to) provisions as to the reporting of 
such loans and information relevant thereto to the Secretary 
and as to the payment of initial and other premiums and the 
effect of default therein, and including provision for confirma-
.,. _ ^, 
tion by the Secretary from time to time (through endorsement 
' " 
^ " 
of the certificate) of the coverage of specific new loans by such 
certificate, which confirmation shall be incontestable by the 
Secretary in the absence of fraud or misrepresentation of fact or 
patent error. 
"(2) UNCOVERED LOANS.—If the holder of a certificate of com-
prehensive insurance coverage issued under this subsection 
grants to a student a line of credit extending beyond the cutoff 
date specified in that certificate, loans or payments thereon 
made by the holder after that date pursuant to the line of credit 
shall not be deemed to be included in the coverage of that 
certificate except as may be specifically provided therein; but, 
subject to the limitations of section 424, the Secretary may, in 
accordance with regulations, make commitments to insure such 
future loans or payments, and such commitments may be hon-
ored either as provided in subsection (a) or by inclusion of such 
insurance on comprehensive coverage under the subsection for 
the period or periods in which such future loans or payments 
are made. 
"(c) CHARGES FOR FEDERAL INSURANCE.—The Secretary shall, 
pursuant to regulations, charge for insurance on each loan under 
this part a premium in an amount not to exceed one-fourth of 1 
percent per year of the unpaid principal amount of such loan 
(excluding interest added to principal), payable in advance, at such 
times and in such manner as may be prescribed by the Secretary. 
Such regulations may provide that such premium shall not be 
payable, or if paid shall be refundable, with respect to any period 
after default in the payment of principal or interest or after the 
borrower has died or becomes totally and permanently disabled, if 
(1) notice of such default or other event has been duly given, and (2) 
requests for payment of the loss insured against has been made or 
the Secretary has made such payment on his own motion pursuant 
to section 430(a). 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1397 
"(d) AssiGNABiUTY OF INSURANCE.—The rights of an eligible 
lender arising under insurance evidenced by a certificate of insur-
ance issued to it under this section may be assigned as security by 
such lender only to another eligible lender, and subject to regulation 
by the Secretary. 
"(e) C!oNSOUDATiON NOT TO AFFECT INSURANCE.—The consolida-
tion of the obligations of two or more federally insured loans 
obtained by a student borrower in any fiscal year into a single 
obligation evidenced by a single instrument of indebtedness shall 
not affect the insurance by the United States. If the loans thus 
consolidated are covered by separate certificates of insurance issued 
under subsection (a), the Secretary may upon surrender of the 
original certificates issue a new certificate of insurance in accord-
ance with that subsection upon the consolidated obligation; if they 
are covered by a single comprehensive certificate issued under 
subsection (b), the Secretary may amend that certificate accordingly. 
"DEFAULT OF STUDENT UNDER FEDERAL LOAN INSURANCE PROGRAM 
"SEC. 430. (a) NOTICE TO SECRETARY AND PAYMENT OF Loss.—Upon 
20 use 1080. 
default by the student borrower on any loan covered by Federal loan 
insurance pursuant to this part, and prior to the commencement of 
suit or other enforcement proceedings upon security for that loan, 
the insurance beneficiary shall promptly notify the Secretary, and 
the Secretary shall if requested (at that time or after further 
collection efforts) by the beneficiary, or may on the Secretary's own 
motion, if the insurance is still in effect, pay to the beneficiary the 
amount of the loss sustained by the insured upon that loan as soon 
as that amount has been determined. The 'amount of the loss' on 
any loan shall, for the purposes of this subsection and subsection (b), 
be deemed to be an amount equal to the unpaid balance of the 
principal amount and accrued interest, including interest accruing 
from the date of submission of a valid default claim (as determined 
by the Secretary) to the date on which pajmient is authorized by the 
Secretary, reduced to the extent required by section 425(b). Such 
beneficiary shall be required to meet the standards of due diligence 
in the collection of the loan and shall be required to submit proof 
that reasonable attempts were made to locate the borrower (when 
c^ji it 
the location of the borrower is unknown) and proof that contact was 
made with the borrower (when the location is known). The Secretary 
shall make the determination required to carry out the provisions of 
this section not later than 90 days after the notification by the 
insurance beneficiary and shall make payment in full on the 
amount of the beneficiary's loss pending completion of the due 
diligence investigation. 
"(b) EFFECT OF PAYMENT OF Loss.—Upon payment of the amount 
. f 
- ; .i 
of the loss pursuant to subsection (a), the United States shall be 
> ii 
subrogated for all of the rights of the holder of the obligation upon 
the insured loan and shall be entitled to an assignment of the note 
or other evidence of the insured loan by the insurance beneficiary. If 
the net recovery made by the Secretary on a loan after deduction of 
the cost of that recovery (including reasonable administrative costs 
and collection costs, to the extent set forth in regulations issued by 
the Secretary) exceeds the amount of the loss, the excess shall be 
paid over to the insured. The Secretary may, in attempting to make 
Contracts. 
recovery on such loans, contract with private business concerns. 
State student loan insurance agencies, or State guaranty agencies. 
100 STAT. 1398 
PUBLIC LAW 99-498—OCT. 17, 1986 
for payment for services rendered by such concerns or agencies in 
assisting the Secretary in making such recovery. Any contract 
under this subsection entered into by the Secretary shall provide 
that attempts to make recovery on such loans shall be fair and 
reasonable, and do not involve harassment, intimidation, false or 
misleading 
representations, 
or 
unnecessary 
communications 
concerning the existence of any such loan to persons other than the 
student borrower. 
"(c) FORBEARANCE NOT PRECLUDED.—Nothing in this section or in 
this part shall be construed to preclude any forbearance for the 
benefit of the student borrower which may be agreed upon by the 
parties to the insured loan and approved by the Secretary, or to 
preclude forbearance by the Secretary in the enforcement of the 
insured obligation after pa3nnent on that insurance. Any forbear-
ance which is approved by the Secretary under this subsection with 
respect to the repayment of a loan, including a forbearance during 
default, shall not be considered as indicating that a holder of a 
federally insured loan has failed to exercise reasonable care and due 
diligence in the collection of the loan. 
•' 
"(d) CARE AND DIUGENCE REQUIRED OF HOLDERS.—Nothing in this 
section or in this part shall be construed to excuse the holder of a 
federally insured loan from exercising reasonable care and diligence 
in the making and collection of loans under the provisions of this 
part. If the Secretary, after a reasonable notice and opportunity for 
hearing to an eligible lender, finds that it has substantially failed to 
exercise such care and diligence or to make the reports and state-
ments required under section 428(a)(4) and section 429(a)(3), or to 
pay the required Federal loan insurance premiums, the Secretary 
shall disqualify that lender for further Federal insurance on loans 
granted pursuant to this part until the Secretary is satisfied that its 
failure has ceased and finds that there is reasonable assurance that 
the lender will in the future exercise necessary care and diligence or 
comply with such requirements, as the case may be. 
"REPORTS TO CREDIT BUREAUS AND INSTITUTIONS OF HIGHER 
EDUCATION 
20 use 1080a. 
"SEC. 430A. (a) AGREEMENTS TO EXCHANGE INFORMATION.—For 
the purpose of promoting responsible repayment of loans covered by 
Federal loan insurance pursuant to this part or covered by a guar-
anty agreement pursuant to section 428, the Secretary, each guar-
anty agency, eligible lender, and subsequent holder shall enter into 
agreements with credit bureau organizations to exchange informa-
tion concerning student borrowers, in accordance with the require-
ments of this section. For the purpose of assisting such organizations 
15 use 1681 
in complying with the Fair Credit Reporting Act, such agreements 
note. 
may provide for timely response by the Secretary (concerning loans 
covered by Federal loan insurance), by a guaranty agency, eligible 
lender, or subsequent holder (concerning loans covered by a guar-
anty agreement), or to requests from such organizations for 
responses to objections raised by borrowers. Subject to the require-
ments of subsection (c), such agreements shall require the Secretary, 
the guaranty agency, eligible lender, or subsequent holder, as appro-
priate, to disclose to such organizations, with respect to any loan 
under this part that has not been repaid by the borrower— 
"(1) the total amount of loans made to any borrower under 
this part and the remaining balance of the loans; 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1399 
"(2) information concerning the date of any default on the 
loan and the collection of the loan, including information 
concerning the repayment status of any defaulted loan on which 
the Secretary has made a payment pursuant to section 430(a) or 
the guaranty agency has made a payment to the previous holder 
of the loan; and 
"(3) the date of cancellation of the note upon completion of 
repayment by the borrower of the loan or payment by the 
Secretary pursuant to section 437. 
"(b) ADDITIONAL INFORMATION.—Such agreements may also pro-
vide for the disclosure by such organizations to the Secretary or a 
guaranty agency, whichever insures or guarantees a loan, upon 
receipt of a notice under subsection (a)(2) that such a loan is in 
default, of information concerning the borrower's location or other 
information which may assist the Secretary, the guaranty agency, 
the eligible lender, or the subsequent holder in collecting the loan. 
"(c) CONTENTS OF AGREEMENTS.—Agreements entered into pursu-
ant to this section shall contain such provisions as may be necessary 
,, 
to ensure that— 
"(1) no information is disclosed by the Secretary or the guar-
anty agency, eligible lender, or subsequent holder unless its 
accuracy and completeness have been verified and the Sec-
retary or the guaranty agency has determined that disclosure 
would accomplish the purpose of this section; 
"(2) as to any information so disclosed, such organizations will 
be promptly notified of, and will promptly record, any change 
submitted by the Secretary, the guaranty agency, eligible 
lender, or subsequent holder with respect to such information, 
or any objections by the borrower with respect to any such 
information, as required by section 611 of the Fair Credit 
Reporting Act (15 U.S.C. 16811); 
"(3) no use will be made of any such information which would 
result in the use of collection practices with respect to such a 
borrower that are not fair and reasonable or that involve 
harassment, intimidation, false or misleading representations, 
or unnecessary communication concerning the existence of such 
loan or concerning any such information; and 
"(4) with regard to notices of default under subsection (a)(2) of 
this section, except for disclosures made to obtain the borrow-
er's location, the Secretary, or the guaranty agency, eligible 
lender, or subsequent holder whichever is applicable (A) shall 
not disclose any such information until the borrower has been 
notified that such information will be disclosed to credit bureau 
organizations unless the borrower enters into repayment of his 
or her loan, but (B) shall, if the borrower has not entered into 
repayment within a reasonable period of time, but not less than 
30 days, from the date such notice has been sent to the bor-
rower, disclose the information required by this subsection. 
"(d) CONTRACTOR STATUS OF PARTICIPANTS.—A guaranty agency, 
eligible lender, or subsequent holder or credit bureau organization 
which discloses or receives information under this section shall not 
be considered a Government contractor within the meaning of 
section 552a of title 5, United States Code. 
"(e) DISCLOSURE TO INSTITUTIONS.—The Secretary and each guar- 
=
=
^ J i; 
anty agency, eligible lender, and subsequent holder of a loan are 
authorized to disclose information described in subsections (a) and 
100 STAT. 1400 
PUBLIC LAW 99-498—OCT. 17, 1986 
(b) concerning student borrowers to the eligible institutions such 
borrowers attend or previously attended. 
Reports. 
"(f) DURATION OF AUTHORITY.—Notwithstanding paragraphs (4) 
and (6) of subsection (a) of section 605 of the Fair Credit Reporting 
Act (15 U.S.C. 1681c (a)(4), (aX6)), a consumer reporting agency may 
make a report containing information received from the Secretary 
or a guaranty agency, eligible lender, or subsequent holder regard-
ing the status of a borrower's defaulted account on a loan guaran-
teed under this part until— 
"(1) 7 years from the date on which the Secretary or the 
agency paid a claim to the holder on the guaranty, or 
"(2) with regard to an account on a loan on which the 
Secretary or the guaranty agency has paid a claim but not 
reported the account to a consumer reporting agency on or 
before October 1,1985, 7 years from that date. 
"INSURANCE FUND 
20 use 1081. 
"SEC. 431. (a) ESTABLISHMENT.—There is hereby established a 
student loan insurance fund (hereinafter in this section called the 
'fund') which shall be available without fiscal year limitation to the 
Secretary for making payments in connection with the default of 
loans insured by the Secretary under this part, or in connection with 
payments under a guaranty agreement under section 428(c). All 
amounts received by the Secretary as premium charges for insur-
ance and as receipts, earnings, or proceeds derived from any claim 
or other assets acquired by the Secretary in connection with oper-
ations under this part, any excess advances under section 
422(c)(4)(C), and any other moneys, property, or assets derived by the 
Secretary from operations in connection with this section, shall be 
deposited in the fund. All payments in connection with the default 
of loans insured by the Secretary under this part, or in connection 
with such guaranty agreements shall be paid from the fund. Moneys 
in the fund not needed for current operations under this section may 
be invested in bonds or other obligations guaranteed as to principal 
and interest by the United States. 
"(b) BORROWING AUTHORITY.—If at any time the moneys in the 
fund are insufficient to make payments in connection with the 
default of any loan insured by the Secretary under this part, or in 
connection with any guaranty agreement made under section 428(c), 
the Secretary is authorized, to the extent provided in advance by 
appropriations Acts, to issue to the Secretary of the Treasury notes 
or other obligations in such forms and denominations, bearing such 
maturities, and subject to such terms and conditions as may be 
prescribed by the Secretary with the approval of the Secretary of 
the Treasury. Such notes or other obligations shall bear interest at a 
rate determined by the Secretary of the Treasury, taking into 
consideration the current average market jdeld on outstanding 
marketable obligations of the United States of comparable matu-
rities during the month preceding the issuance of the notes or other 
obligations. The Secretary of the Treasury is authorized and di-
rected to purchase any notes and other obligations issued hereunder 
and for that purpose is authorized to use as a public debt transaction 
the proceeds from the sale of any securities issued under the Second 
31 use 774. 
Liberty Bond Act, as amended, and the purposes for which securities 
may be issued under that Act, as amended, are extended to include 
any purchase of such notes and obligations. The Secretary of the 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1401 
Treasury may at any time sell any of the notes or other obligations 
acquired under this subsection. All redemptions, purchases, and 
sales by the Secretary of the Treasury of such notes or other 
obligations shall be treated as public debt transactions of the United 
States. Sums borrowed under the subsection shall be deposited in 
the fund and redemption of such notes and obligations shall be made 
by the Secretary from such fund. 
"LEGAL POWERS AND RESPONSIBILITIES 
"SEC. 432. (a) GENERAL POWERS.—In the performance of, and with 
20 use 1082. 
respect to, the functions, powers, and duties, vested in him by this 
part, the Secretary may— 
"(1) prescribe such regulations as may be necessary to carry 
out the purposes of this part; 
"(2) sue and be sued in any court of record of a State having 
general jurisdiction or in any district court of the United States, 
and such district courts shall have jurisdiction of civil actions 
arising under this part without regard to the amount in con-
troversy, and action instituted under this subsection by or 
against the Secretary shall survive notwithstanding any change 
in the person occupying the office of Secretary or any vacancy 
in that office; but no attachment, injunction, garnishment, or 
other similar process, mesne or final, shall be issued against the 
Secretary or property under the Secretary's control and nothing 
herein shall be construed to except litigation arising out of 
activities under this part from the application of sections 509, 
517, 547, and 2679 of title 28 of the United States Code; 
"(3) include in any contract for Federal loan insurance such 
Contracts. 
terms, conditions, and covenants relating to repa)mient of prin-
cipal and payment of interest, relating to the Secretary's obliga-
tions and rights to those of eligible lenders, and borrowers in 
case of default, and relating to such other matters as the 
Secretary determines to be necessary to assure that the pur-
poses of this part will be achieved; and any term, condition, and 
covenant made pursuant to this paragraph or pursuant to any 
other provision of this part may be modified by the Secretary, 
after notice and opportunity for a hearing on the record, if the 
Secretary finds that the modification is necessary to protect the 
United States from the risk of unreasonable loss; 
"(4) subject to the specific limitations in this part, consent to 
modification, with respect to rate of interest, time of payment of 
,Br,nmhm: 
any installment of principal and interest or any portion thereof, 
or any other provision of any note or other instrument evidenc-
ing a loan which has been insured by the Secretary under this 
part; 
"(5) enforce, pay, or compromise, any claim on, or arising 
because of, any such insurance or any guaranty agreement 
under section 428(c); and 
"(6) enforce, pay, compromise, waive, or release any right, 
title, claim, lien, or demand, however acquired, including any 
equity or any right of redemption. 
"(b) 
FINANCIAL OPERATIONS RESPONSIBIUTIES.—The Secretary 
shall, with respect to the financial operations arising by reason of 
this part— 
100 STAT. 1402 
PUBLIC LAW 99-498—OCT. 17, 1986 
31 u s e 9101 et 
seq. 
Insurance. 
Reports. 
Insurance. 
"(1) prepare annually and submit a budget program as pro-
vided for wholly owned Government corporations by chapter 91 
of title 31, United States Code; and 
"(2) maintain with respect to insurance under this part an 
integral set of accounts and prepare financial statements in 
accordance with generally accepted accounting principles, 
which shall be audited annually by the General Accounting 
Office in conformity with generally accepted Government audit-
ing standards except that the transactions of the Secretary, 
including the settlement of insurance claims and of claims for 
payments pursuant to section 428, and transactions related 
thereto and vouchers approved by the Secretary in connection 
with such transactions, shall be final and conclusive upon all 
accounting and other officers of the Government. 
'(c) DATA COLLECTION.— 
"(1) COLLECTION BY CATEGORY OF LOAN.—(A) For loans insured 
after December 31, 1976, or in the case of each insurer after 
such earlier date where the data required by this subsection are 
available, the Secretary and all other insurers under this part 
shall collect and accumulate all data relating to (i) loan volume 
insured and (ii) defaults reimbursed or default rates according 
to the categories of loans listed in subparagraph (B) of this 
paragraph. 
"(B) The data indicated in subparagraph (A) of this paragraph 
shall be accumulated according to the category of lender 
making the loan and shall be accumulated separately for lend-
ers who are (i) eligible institutions, (ii) State or private, non-
profit direct lenders, (iii) commercial financial institutions who 
are banks, savings and loan associations, or credit unions, and 
(iv) all other types of institutions or agencies. 
"(C) 
The 
Secretary 
may 
designate 
such 
additional 
subcategories within the categories specified in subparagraph 
(B) of this paragraph as the Secretary deems appropriate. 
"(D) The category or designation of a loan shall not be 
changed for any reason, including its purchase or acquisition by 
a lender of another category. 
"(2) COLLECTION AND REPORTING REQUIREMENTS.—(A) The Sec-
retary shall collect data under this subsection from all insurers 
under this part and shall publish not less often than once every 
fiscal year a report showing loan volume guaranteed and de-
fault data for each category specified in subparagraph (B) of 
paragraph (1) of this subsection and for the total of all lenders. 
"(B) The reports specified in subparagraph (A) of this para-
graph shall include a separate report for each insurer under 
this part including the Secretary, and where an insurer insures 
loans for lenders in more than one State, such insurer's report 
shall list all data separately for each State. 
"(3) INSTITUTIONAL, PUBUC, OR NONPROFIT LENDERS.—For pur-
poses of clarity in communications, the Secretary shall sepa-
rately identify loans made by the lenders referred to in clause (i) 
and loans made by the lenders referred to in clause (ii) of 
paragraph (IXB) of this subsection. 
'(d) DELEGATION.— 
"(1) REGIONAL OFFICES.—The functions of the Secretary under 
this part listed in paragraph (2) of this subsection may be 
delegated to employees in the regional office of the Department. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1403 
Y* 
"(2) DELEGABLE FUNCTIONS.—The functions which may be 
delegated pursuant to this subsection are— 
"(A) reviewing applications for loan insurance under sec-
tion 429 and issuing contracts for Federal loan insurance, 
certificates of insurance, and certificates of comprehensive 
insurance coverage to eligible lenders which are financial 
or credit institutions subject to examination and super-
vision by an agency of the United States or of any State; 
"(B) receiving claims for payments under section 430(a), 
examining those claims, and pursuant to regulations of the 
i^ 
Secretary, approving claims for payment, or requiring lend-
ers to take additional collection action as a condition for 
payment of claims; and 
«-- ' 
"(C) certifying to the central office when collection of 
*' 
defaulted loans has been completed, compromising or agree-
ing to the modification of any Federal claim against a 
borrower (pursuant to regulations of the Secretary issued 
under section 432(a)), and recommending litigation with 
respect to any such claim. 
"(e) USE OF INFORMATION ON BORROWERS.—Notwithstanding any 
other provision of law, the Secretary may provide to eligible lenders, 
and to any guaranty agency having a guaranty agreement under 
section 428(c)(1), any information with respect to the names and 
addresses of borrowers or other relevant information which is avail-
able to the Secretary, from whatever source such information may 
be derived. 
"(f) AUDIT OF FINANCIAL TRANSACTIONS.— 
"(1) COMPTROLLER GENERAL AND INSPECTOR GENERAL AUTHOR-
ITY.—The Comptroller General and the Inspector General of the 
Department of Education shall each have the authority to 
\ 
conduct an audit of the financial transactions of— 
"(A) any guaranty agency operating under an agreement 
j' 
with the Secretary pursuant to section 428(b); 
V 
"(B) any eligible lender as defined in section 435(d)(1) (D), 
: 
(F),or(H); 
^ 
"(C) a representative sample of eligible lenders under this 
t 
part, upon the request of the Committee on Education and 
3 
Labor of the House of Representatives or the Committee on 
*r, 
Labor and Human Resources of the Senate, with respect to 
i 
the pa5mient of the special allowance under section 438 in 
order to evaluate the program authorized by this part; and 
f^ •«_ 
"(D) any Authority required to file a plan for doing 
i 
business under section 438(d). 
, 
"(2) ACCESS TO RECORDS.—For the purpose of carrying out this 
subsection, the records of any entity described in subparagraph 
(A), (B), (C), or (D) of paragraph (1) shall be available to the 
Comptroller General and the Inspector General of the Depart-
ment of Education. For the purpose of section 716(c) of title 31, 
United States Code, such records shall be considered to be 
records to which the Comptroller General has access by law, 
and for the purpose of section 6(a)(4) of the Inspector General 
Act of 1978, such records shall be considered to be records 
necessary in the performance of functions assigned by that Act 
to the Inspector General. 
"(3) DEFINITION OF RECORDS.—For the purpose of this subsec-
tion, the term 'record' includes any information, document, 
Insurance. 
Contracts. 
Claims. 
5 u s e app. 
100 STAT. 1404 
PUBLIC LAW 99-498—OCT. 17, 1986 
r
^ 
i
?
5
=
!
« ' 
J 
report, answer, account, paper, or other data or documentary 
V tffi^; 
evidence. 
"(g) CIVIL PENALTIES.— 
"(1) AUTHORITY TO IMPOSE PENALTIES.—Upon determination, 
after reasonable notice and opportunity for a hearing on the 
record, that a lender or a guaranty agency— 
"(A) has violated or failed to carry out any provision of 
this part or any regulation prescribed under this part, or 
"(B) has engaged in substantial misrepresentation of the 
nature of its financial charges, 
the Secretary may impose a civil penalty upon such lender or 
agency of not to exceed $25,000 for each violation, failure, or 
misrepresentation. 
aoiie'j 
"^^^ LIMITATIONS.—No civil penalty may be imposed under 
paragraph (1) of this subsection unless it is determined that the 
violation, failure, or substantial misrepresentation referred to 
in that paragraph resulted from— 
"(A)(i) a clear and consistent pattern or practice of viola-
tions, failures, or substantial misrepresentations in which 
^ .^. 
the lender or guaranty agency did not maintain procedures 
reasonably adapted to avoid the violation, failure, or 
substantial representation; 
"(ii) gross negligence; or 
"(iii) willful actions on the part of the lender or guaranty 
agency; and 
(Kii > 
"(g) ^jjg violation, failure, or substantial representation is 
material. 
"(3) CORRECTION OF FAILURE.—A lender or guaranty agency 
has no liability under paragraph (1) of this subsection if, prior to 
the institution of an action under that paragraph, the lender or 
guaranty agency cures or corrects the violation or failure or 
notifies the person who received the substantial misrepresenta-
^ ' tion of the actual nature of the financial charges involved. 
"(4) CONSIDERATION AS SINGLE VIOLATION.—For the purpose of 
.;>.? paragraph (1) of this subsection, violations, failures, or substan-
tial misrepresentations arising from a specific practice of a 
lender or guaranty agency shall be deemed to be a single 
violation, failure, or substantial misrepresentation even if the 
violation, failure, or substantial misrepresentation affects more 
than one loan or more than one borrower, or both, and the 
Secretary may only impose a single civil penalty for each such 
violation, failure, or substantial misrepresentation. 
"(5) ASSIGNEES NOT LIABLE FOR VIOLATIONS BY OTHERS.—If a 
loan affected by a violation, failure, or substantial misrepresen-
tation is assigned to another holder, the lender or guaranty 
agency responsible for the violation, failure, or substantial mis-
representation shall remain liable for any civil money penalty 
provided for under paragraph (1) of this subsection, but the 
assignee shall not be liable for any such civil money penalty. 
"(6) COMPROMISE.—Until a matter is referred to the Attorney 
General, any civil penalty under paragraph (1) of this subsec-
tion may be compromised by the Secretary. In determining the 
;,] ;c i T 
amount of such penalty, or the amount agreed upon in com-
j; J promise, the Secretary shall consider the appropriateness of the 
penalty to the resources of the lender or guaranty agency 
subject to the determination; the gravity of the violation, fail-
ure, or substantial misrepresentation; the frequency and 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1405 
persistence of the violation, failure, or substantial misrepresen-
tation; and the amount of any losses resulting from the viola-
tion, failure, or substantial misrepresentation. The amount of 
such penalty, when finally determined, or the amount agreed 
upon in compromise, may be deducted from any sums owing by 
the United States to the lender or agency charged, unless the 
lender or agency has, in the case of a final agency determina-
tion, commenced proceedings for judicial review within 90 days 
of the determination, in which case the deduction may not be 
made during the pendency of the proceeding. 
"(h) 
AUTHORITY OF THE SECRETARY TO IMPOSE AND ENFORCE 
LIMITATIONS, SUSPENSIONS, AND TERMINATIONS.— 
"(1) IMPOSITION OF SANCTIONS.—(A) If the Secretary, after a 
reasonable notice and opportunity for hearing to an eligible 
lender, finds that the eligible lender— 
"(i) has substantially failed— 
"(I) to exercise reasonable care and diligence in the 
making and collecting of loans under the provisions of 
this part, 
"(II) to make the reports or statements under section 
428(a)(4), or 
"(III) to pay the required loan insurance premiums to 
d:.mi 
> 
any guaranty agency, or 
"(ii) has engaged in— 
"(I) fraudulent or misleading advertising or in solici-
tations that have resulted in the making of loans in-
sured or guaranteed under this part to borrowers who 
i 
, 
are ineligible; or 
"(II) the practice of making loans that violate the 
Insurance, 
certification for eligibility provided in section 428, 
the Secretary shall limit, suspend, or terminate that lender 
from participation in the insurance programs operated by guar-
anty agencies under this part. 
"(B) The Secretary shall not lift any such limitation, suspen-
sion, or termination until the Secretary is satisfied that the 
lender's failure under subparagraph (A)(i) of this paragraph or 
practice under subparagraph (A)(ii) of this paragraph has ceased 
and finds that there are reasonable assurances that the lender 
will— 
"(i) exercise the necessary care and diligence, 
"(ii) comply with the requirements described in subpara-
graph (A)(i), or 
"(iii) cease to engage in the practices described in 
subparagraph (A)(ii), 
as the case may be. 
"(2) REVIEW OF SANCTIONS ON LENDERS.—(A) The Secretary 
shall, in accordance with sections 556 and 557 of title 5, United 
• •i-
States Code, review each limitation, suspension, or termination 
imposed 
by any 
guaranty 
agency 
pursuant 
to 
section 
428(b)(l)(U) within 60 days after receipt by the Secretary of a 
notice from the guaranty agency of the imposition of such 
limitation, suspension, or termination, unless the right to such 
review is waived in writing by the lender. The Secretary shall 
disqualify such lender from participation in the student loan 
insurance program of each of the guaranty agencies under this 
part, and notify such guaranty agencies of such disqualifica-
tion— 
100 STAT. 1406 
PUBLIC LAW 99-498—OCT. 17, 1986 
^-^^ 
"(i) if such review is waived; or 
"(ii) if such review is not waived, unless the Secretary 
I 
determines that the limitation, suspension, or termination 
' 
was not imposed in accordance with requirements of such 
section. 
"(B) The Secretary shall not lift any such disqualification 
until the Secretary is satisfied that the lender has corrected the 
failures which led to the limitation, suspension, or termination, 
and finds that there are reasonable assurances that the lender 
will, in the future, comply with the requirements of this part. 
The Secretary shall notify each guaranty agency of the lifting of 
any such disqualification. 
"(3) REVIEW OF SANCTIONS ON ELIGIBLE INSTITUTIONS.—(A) The 
Secretary shall, in accordance with sections 556 and 557 of title 
5, United States Code, review each limitation, suspension, or 
termination imposed by any guaranty agency pursuant to sec-
tion 428(b)(l)(T) within 60 days after receipt by the Secretary of 
a notice from the guaranty agency of the imposition of such 
limitation, suspension, or termination, unless the right to such 
review is waived in writing by the institution. The Secretary 
shall disqualify such institution from participation in the stu-
dent loan insurance program of each of the guaranty agencies 
under this part, and notify such guaranty agencies of such 
disqualification— 
"(i) if such review is waived; or 
•" 
"(ii) if such review is not waived, unless the Secretary 
c 
determines that the limitation, suspension, or termination 
was not imposed in accordance with requirements of such 
.ill 
f'rf? 
section. 
"(B) The Secretary shall not lift any such disqualification 
until the Secretary is satisfied that the institution has corrected 
the failures which led to the limitation, suspension, or termi-
nation, and finds that there are reasonable assurances that the 
institution will, in the future, comply with the requirements of 
this part. The Secretary shall notify each guaranty agency of 
the lifting of any such disqualification. 
"(i) AUTHORITY TO SELL DEFAULTED LOANS.—In the event that all 
other collection efforts have failed, the Secretary is authorized to 
sell defaulted student loans assigned to the United States under this 
part to collection agencies, eligible lenders, guaranty agencies, or 
other qualified purchaser on such terms as the Secretary determines 
are in the best financial interests of the United States. A loan may 
not be sold pursuant to this subsection if such loan is in repayment 
status. 
"STUDENT LOAN INFORMATION BY EUGIBLE LENDERS 
20 use 1083. 
"SEC. 433. (a) REQUIRED DISCLOSURE BEFORE DISBURSEMENT.—Each 
eligible lender shall, at or prior to the time such lender disburses a 
loan which is insured or guaranteed under this part, provide thor-
ough and accurate loan information on such loan to the borrower. 
Any disclosure required by this subsection may be made by an 
eligible lender as part of the written application material provided 
to the borrower, or as part of the promissory note evidencing the 
loan, or on a separate written form provided to the borrower. The 
disclosure shall include— 
"(1) the name of the eligible lender, and the address to which 
communications and payments should be sent; 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1407 
"(2) the principal amount of the loan; 
"(3) the amount of any charges, such as the origination fee 
and insurance premium, collected by the lender at or prior to 
the disbursal of the loan and whether such charges are deducted 
from the proceeds of the loan or paid separately by the bor-
rower; 
"(4) the stated interest rate on the loan; 
"(5) the yearly and cumulative maximum amounts that may 
be borrowed; 
"(6) an explanation of when repayment of the loan will be 
required and when the borrower will be obligated to pay 
interest that accrues on the loan; 
"(7) a statement as to the minimum and maximum repayment 
term which the lender may impose, and the minimum annual 
payment required by law; 
"(8) a statement of the total cumulative balance, including the 
loan applied for, owed by the student to that lender, the pro-
jected level of indebtedness of the student based on a 4-year 
college career, and an estimate of the projected monthly repay-
ment given the level of indebtedness over a 4- or 5-year 
college career; 
"(9) an explanation of any special options the borrower may 
have for loan consolidation or other refinancing of the loan; 
"(10) a statement that the borrower has the right to prepay 
all or part of the loan, at any time, without penalty, a statement 
summarizing circumstances in which repayment of the loan or 
interest that accrues on the loan may be deferred, and a brief 
^j., -,^ ^
i 
notice of the program for repayment of loans, on the basis of 
military service, pursuant to section 902 of the Department of 
Defense Authorization Act, 1981 (10 U.S.C. 2141, note); 
"(11) a definition of default and the consequences to the 
borrower if the borrower defaults, including a statement that 
the default will be reported to a credit bureau or credit report-
ing agency; 
"(12) to the extent practicable, the effect of accepting the loan 
on the eligibility of the borrower for other forms of student 
assistance; and 
"(13) an explanation of any cost the borrower may incur in 
the making or collection of the loan. 
"(b) 
REQUIRED DISCLOSURE BEFORE REPAYMENT.—Each eligible 
lender shall, at or prior to the start of the repayment period of the 
student borrower on loans made, insured, or guaranteed under this 
part, disclose to the borrower the information required under this 
subsection. Any disclosure required by this subsection may be made 
by an eligible lender either in a promissory note evidencing the loan 
"'^-J 
or loans or in a written statement provided to the borrower. The 
disclosure shall include— 
"(1) the name of the eligible lender, and the address to which 
communications and payments should be sent; 
"(2) the scheduled date upon which the repayment period is to 
begin; 
"(3) the estimated balance owed by the borrower on the loan 
or loans covered by the disclosure as of the scheduled date on 
which the repayment period is to begin (including, if applicable, 
, 
^ 
the estimated amount of interest to be capitalized); 
100 STAT. 1408'' 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(4) the stated interest rate on the loan or loans, or the 
combined interest rate of loans with different stated interest 
rates; 
"(5) the nature of any fees which may accrue or be charged to 
the borrower during the repayment period; 
"(6) the repayment schedule for all loans covered by the 
disclosure including the date the first installment is due, and 
the number, amount, and frequency of required payments; 
"(V an explanation of any special options the borrower may 
have for loan consolidation or other refinancing of the loan and 
of the availability and terms of such other options; 
"(8) the projected total of interest charges which the borrower 
will pay on the loan or loans, assuming that the borrower 
makes payments exactly in accordance with the repayment 
schedule; and 
"(9) a statement that the borrower has the right to prepay all 
or part of the loan or loans covered by the disclosure at any 
time without penalty. 
Claims. 
"(c) CoST OF DISCLOSURE AND CONSEQUENCES OF NONDISCLOSURE.— 
Contracts. 
Such information shall be available without cost to the borrower. 
The failure of an eligible lender to provide information as required 
by this section shall not (1) relieve a borrower of the obligation to 
repay a loan in accordance with its terms, (2) provide a basis for a 
claim for civil damages, or (3) be deemed to abrogate the obligation 
of the Secretary under a contract of insurance or reinsurance, or the 
obligation of a guaranty agency under a contract of guaranty. 
Nothing in this section shall be construed as subjecting the lender to 
15 use 1601 
the Truth in Lending Act with regard to loans made under this part. 
»»ote. 
The Secretary may limit, suspend, or terminate the continued 
participation of an eligible lender in making loans under this part 
for failure by that lender to comply with this section. 
"(d) SEPARATE STATEMENT.—Each eligible lender shall, at the time 
such lender makes the first disbursement of a loan with respect to a 
borrower which is insured or guaranteed under this part, provide 
the borrower with a separate paper which summarizes (in plain 
English) the rights and responsibilities of the borrower with respect 
to the loan, including a statement of the consequences of defaulting 
on the loan and a statement that each borrower who defaults will be 
reported to a credit bureau. The requirement of this subsection shall 
be in addition to the information required by subsection (a) of this 
section. 
"PARTICIPATION BY FEDERAL CREDIT UNIONS IN FEDERAL, STATE, AND 
PRIVATE STUDENT LOAN INSURANCE PROGRAMS 
20 use 1084. 
"SEC 434. Notwithstanding any other provision of law. Federal 
credit unions shall, pursuant to regulations of the National Credit 
Union Administration, have power to make insured loans to student 
members in accordance with the provisions of this part relating to 
federally insured loans, or in accordance with the provisions of any 
State or nonprofit private student loan insurance program which 
meets the requirements of section 428(a)(1)(B). 
, j , j,?; 
"DEFINITIONS FOR STUDENT LOAN INSURANCE PROGRAM 
;, 
20 use 1085. 
"SEC. 435. As used in this part: 
.,, 
, . „ 
•. ., , ., ' T 
(a) EUGIBLE INSTITUTION.— 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1409 
» 
"(1) IN GENERAL.—The term 'eligible institution' means— 
"(A) an institution of higher education; 
"(B) a vocational school; or 
"(C) with respect to students who are nationals of the 
United States, an institution outside the United States 
which is comparable to an institution of higher education or 
to a vocational school and which has been approved by the 
Secretary for the purpose of this part, 
except that such term does not include any such institution or 
school which employs or uses commissioned salesmen to pro-
mote the availability of any loan program described in section 
428(a)(1), 428A, or 428B at that institution or school. 
"(2) FOREIGN MEDICAL SCHOOLS.—For the purpose of qualifying 
an institution under paragraph (1)(C) of this subsection, the 
Secretary shall establish criteria by regulation. In the case of a 
graduate medical school outside the United States, such criteria 
shall include a requirement that a student attending a medical 
school is ineligible for loans made, insured, or guaranteed under 
this part unless at least 60 percent of the students enrolled in 
such school are nationals of the country in which the school is 
located. A school that is unable to meet that criteria may 
establish the eligibility of its students for such loans if the 
United States nationals attending such school achieve a pass 
rate on the examinations administered by the Educational 
Commission for Foreign Medical Graduates that is— 
"(A) not less than 45 percent for students taking such 
examination in the first and second years after the date of 
enactment of the Higher Education Amendments of 1986; 
^ I, 
and 
"(B) not less than 50 percent for students taking such 
examination in any subsequent year. 
"(b) INSTITUTION OF HIGHER EDUCATION.—The term 'institution of 
higher education' means an educational institution in any State 
which— 
"(1) admits as regular students only persons having a certifi-
cate of graduation from a school providing secondary education, 
or the recognized equivalent of such certificate, or who are 
beyond the age of compulsory school attendance; 
"(2) is legally authorized within such State to provide a 
program of education beyond secondary education; 
"(3) provides an educational program for which it awards a 
bachelor's degree or provides not less than a 2-year program 
which is acceptable for full credit toward such a degree; 
"(4) is a public or other nonprofit institution; and 
"(5) is accredited by a nationally recognized accrediting 
agency or association approved by the Secretary for this pur-
pose or, if not so accredited— 
"(A) is an institution with respect to which the Secretary 
has determined that there is satisfactory assurance, consid-
ering the resources available to the institution, the period 
*
^ 
of time, if any, during which it has operated, the effort it is 
making to meet accreditation standards, and the purpose 
for which this determination is being made, that the 
institution will meet the accreditation standards of such an 
agency or association within a reasonable time; or 
"(B) is an institution whose credits are accepted on trans-
fer by not less than three institutions which are so accred-
100 STAT. 1410 
PUBLIC LAW 99-498—OCT. 17, 1986 
-a« 
ited, for credit on the same basis as if transferred from an 
institution so accredited. 
Such term includes any school which provides not less than a 1-year 
program of training to prepare students for gainful employment in a 
recognized occupation and which meets the provisions of paragraphs 
(1), (2), (4), and (5). If the Secretary determines that a particular 
category of such schools does not meet the requirements of para-
graph (5) because there is no nationally recognized accrediting 
agency or association qualified to accredit schools in such category, 
the Secretary shall, pending the establishment of such an accredit-
ing agency or association, appoint an advisory committee, composed 
of persons specially qualified to evaluate training provided by 
schools in such category, which shall (i) prescribe the standards of 
content, scope, and quality which must be met in order to qualify 
schools in such category to participate in the program pursuant to 
this part, and (ii) determine whether particular schools not meeting 
the requirements of paragraph (5) meet those standards. For the 
purpose of this subsection, the Secretary shall publish a list of 
nationally recognized accrediting agencies or associations which the 
Secretary determines to be reliable authorities as to the quality of 
training offered. 
"(c) VOCATIONAL SCHOOL.—The term 'vocational school' means a 
business or trade school, or technical institution or other technical 
or vocational school, in any State, which— 
"(1) admits as regular students only persons who have com-
pleted or left elementary or secondary school and who have the 
ability to benefit (as determined by the institution under section 
481(d)) from the training offered by such institution; 
"(2) is legally authorized to provide, and provides within that 
State, a program of postsecondary vocational or technical edu-
cation designed to fit individuals for useful employment in 
recognized occupations; 
"(3) has been in existence for 2 years or has been specially 
accredited by the Secretary as an institution meeting the other 
requirements of this subsection; and 
(,^,, "(4) is accredited— 
"(A) by a nationally recognized accrediting agency or 
£ 3 
association listed by the Secretary pursuant to this para-
graph; 
"(B) if the Secretary determines that there is no nation-
ally recognized accrediting agency or association qualified 
to accredit schools of a particular category, by a State 
agency listed by the Secretary pursuant to this paragraph; 
and 
"(C) if the Secretary determines there is no nationally 
recognized or State agency or association qualified to ac-
credit schools of a particular category, by an advisory 
committee appointed by the Secretary and composed of 
persons specially qualified to evaluate training provided by 
schools of that category, which committee shall prescribe 
the standards of content, scope, and quality which must be 
met by those schools in order for loans to students attend-
ing them to be insurable under this part and shall also 
determine whether particular schools meet those standards. 
For the purpose of this subsection, the Secretary shall publish a list 
of nationally recognized accrediting agencies or associations and 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1411 
State agencies which the Secretary determines to be reliable author-
ity as to the quality of education or training afforded. 
"(d) EuGiBLE LENDER.— 
"(1) IN GENERAL.—Except as provided in paragraphs (2) . 
through (5), the term 'eligible lender' means— 
"(A) a National or State chartered bank, a mutual sav-
ings bank, a savings and loan association, a stock savings 
bank, a trust company, or a credit union which— 
"(i) is subject to examination and supervision by an 
agency of the United States or of the State in which its 
principal place of operation is established, and 
"(ii) does not have as its primary consumer credit 
function the making or holding of loans made to stu-
dents under this part unless (I) it is a bank which is 
wholly owned by a State, (II) it is a single wholly owned 
subsidiary of a bank holding company which does not 
have as its primary consumer credit function the 
making or holding of loans made to students under this 
part, or (III) it is a trust company which makes student 
loans as a trustee pursuant to an express trust and 
which operated as a lender under this part prior to 
January 1,1981; 
"(B) a pension fund as defined in the Employee Retire-
ment Income Security Act; 
"(C) an insurance company which is subject to examina-
tion and supervision by an agency of the United States or a 
State; 
"(D) in any State, a single agency of the State or a single 
nonprofit private agency designated by the State; 
~' ' 
"(E) an eligible institution which meets the requirements 
of paragraphs (2) through (5) of this subsection; 
"(F) for purposes only of purchasing and holding loans 
made by other lenders under this part, the Student Loan 
Marketing Association or an agency of any State function-
ing as a secondary market; 
'(G) for purposes of making loans under sections 428A(d), 
428B(d), 428C, and 439(q), the Student Loan Marketing 
Association; 
"(H) for purposes of making loans under sections 428(h) 
and 4280"), a guaranty agency; and 
"(I) a Rural Rehabilitation Corporation, or its successor 
agency, which has received Federal funds under Public Law 
499, Eighty-first Congress (64 Stat. 98 (1950)). 
"(2) ADDITIONAL REQUIREMENTS OF EUGIBLE INSTITUTIONS.—To 
be an eligible lender under this part, an eligible institution— 
"(A) shall employ at least one person whose full-time 
responsibilities are limited to the administration of pro-
grams of financial aid for students attending such institu-
tion; and 
"(B) shall not be a home study school. 
"(3) DISQUALIFICATION FOR HIGH DEFAULT RATES.—The term 
'eligible lender' does not include any eligible institution in any 
fiscal year immediately after the fiscal year in which the Sec-
retary determines, after notice and opportunity for a hearing, 
that for each of 2 consecutive years, 15 percent or more of the 
total amount of such loans as are described in section 428(aXl) 
made by the institution with respect to students at that institu-
100 STAT. 1412 
PUBLIC LAW 99-498—OCT. 17, 1986 
tion and repayable in each such year, are in default, as defined 
in section 435(o). 
"(4) WAIVER OF DISQUALIFICATION.—Whenever the Secretary 
determines that— 
"(A) there is reasonable possibility that an eligible 
institution may, within 1 year after a determination is 
made under paragraph (3), improve the collection of loans 
described in section 428(a)(1), so that the application of 
ij-v 
paragraph (3) would be a hardship to that institution, or 
.« - 
"(B) the termination of the lender's status under para-
graph (3) would be a hardship to the present or for prospec-
tive students of the eligible institution, after considering 
the management of that institution, the ability of that 
institution to improve the collection of loans, the opportuni-
ties that institution offers to economically disadvantaged 
students, and other related factors, 
the Secretary shall waive the provisions of paragraph (3) with 
respect to that institution. Any determination required under 
this paragraph shall be made by the Secretary prior to the 
termination of an eligible institution as a lender under the 
exception of paragraph (3). Whenever the Secretary grants a 
waiver pursuant to this paragraph, the Secretary shall provide 
technical assistance to the institution concerned in order to 
improve the collection rate of such loans. 
"(5) DISQUALIFICATION FOR USE OF CERTAIN INCENTIVES.—The 
term 'eligible lender' does not include any lender that the 
Secretary determines, after notice and opportunity for a hear-
ing, has after the date of enactment of this paragraph— 
"(A) offered, directly or indirectly, points, premiums, pay-
^ '"*'' 
ments, or other inducements, to any educational institution 
or individual in order to secure applicants for loans under 
this part; 
"(B) conducted unsolicited mailings to students of student 
loan application forms, except to students who have pre-
.»., 
viously received loans under this part from such lender; 
'^ 
"(C) offered, directly or indirectly, loans under this part 
as an inducement to a prospective borrower to purchase a 
policy of insurance or other product; or 
"(D) engaged in fraudulent or misleading advertising. 
"(e) LINE OF CREDIT.—The term 'line of credit' means an arrange-
ment or agreement between the lender and the borrower whereby a 
loan is paid out by the lender to the borrower in annual install-
ments, or whereby the lender agrees to make, in addition to the 
initial loan, additional loans in subsequent years. 
"(f) DUE DIUGENCE.—The term 'due diligence' requires the utiliza-
tion by a lender, in the servicing and collection of loans insured 
under this part, of collection practices at least as extensive and 
forceful as those generally practiced by financial institutions for the 
collection of consumer loans. 
"(g) TEMPORARILY TOTALLY DISABLED.— 
"(1) IN GENERAL.—The term 'temporarily totally disabled' 
when used with respect to a borrower means a borrower who, by 
reason of injury or illness, cannot be expected to be able to 
attend an eligible institution or to be gainfully employed during 
a reasonable period of recovery from such injury or illness not 
to exceed 3 years. 
•'(XL 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1413 
"(2) DISABLED DEPENDENT OF A BORROWER.—Such term when 
used with respect to the disabled dependent of a single parent 
borrower means a dependent who, by reason of injury or illness, 
cannot be expected to be able to attend school or to be gainfully 
employed during a period of injury or illness of not less than 3 
months and who during such period requires continuous nurs-
ing or similar services. 
"(3) DETERMINATIONS.—The determination that a borrower, or 
dependent of the borrower is temporarily totally disabled must 
be established by a sworn affidavit of a qualified physician. 
"(h) DEFINITION OF PARENTAL LEAVE.—The term 'parental leave' 
means a period— 
"(1) during which the borrower is pregnant, caring for his or 
her newborn child, or caring for his or her child immediately 
following the placement of the child through adoption; 
"(2) during which such borrower is not in attendance at an 
eligible institution or gainfully employed; and 
' 
"(3) which follows, by 6 months or less, a period during which 
the borrower was enrolled in at least a half-time course of study 
at an eligible institution. 
' "(i) HOLDER.—The term 'holder' means an eligible lender who 
owns a loan. 
"0') GUARANTY AGENCY.—The term 'guaranty agency' means any 
State or nonprofit private institution or organization with which the 
Secretary has an agreement under section 42806). 
"(k) INSURANCE BENEFICIARY.—The term 'insurance beneficiary' 
means the insured or its authorized representative assigned in 
accordance with section 429(d). 
"(1) DEFAULT.—The term 'default' includes only such defaults as 
have existed for (1) 180 days in the case of a loan which is repayable 
in monthly installments, or (2) 240 days in the case of a loan which 
is repayable in less frequent installments. 
"DISTRICT OF COLUMBIA STUDENT LOAN INSURANCE PROGRAM 
"SEC. 436. (a) AUTHORITY.—The government of the District of 
20 use 1086. 
Columbia is authorized (1) to establish a student loan insurance 
program which meets the requirements of this part for a State loan 
insurance program in order to enter into agreements with the 
Secretary for the purposes of this title, (2) to enter into such 
agreements with the Secretary, (3) to use amounts appropriated for 
the purposes of this section to establish a fund for such purposes and 
for expenses in connection therewith, and (4) to accept and use 
donations for the purposes of this section. 
"(b) BINDING EFFECT ON MINORS.—Notwithstanding the provisions 
of any applicable law, if the borrower, on any loan insured under the 
program established pursuant to this section, is a minor, any other-
wise valid vote or other written agreement executed by him for the 
purposes of such loan shall create a binding obligation. 
"(c) APPROPRIATIONS AUTHORIZED.—There are authorized to be 
^
S 
appropriated such amounts as may be necessary for the purposes of 
this section. 
100 STAT. 1414 
PUBLIC LAW 99-498—OCT. 17, 1986 
"REPAYMENT BY THE SECRETARY OF LOANS OF BANKRUPT, DECEASED, 
OR DISABLED BORROWERS 
20 use 1087. 
"SEC. 437. (a) REPAYMENT IN FULL.—If a student borrower who has 
received a loan described in subparagraph (A) or (B) of section 
428(a)(1) dies or becomes permanently and totally disalbled (as deter-
mined in accordance with regulations of the Secretary), then the 
Secretary shall discharge the borrower's liability on the loan by 
repaying the amount owed on the loan. 
"(b) REPAYMENT OF AMOUNT DISCHARGED.—If a student borrower 
who has received a loan described in subparagraph (A) or (B) of 
section 428(a)(1) is relieved of his obligation to repay such loan, in 
whole or in part, through a discharge in bankruptcy, the Secretary 
shall repay the amount of the loan so discharged. 
"SPECIAL ALLOWANCES 
20 use 1087-1. 
"SEC. 438. (a) FINDINGS.—In order to assure (1) that the limitation 
on interest payments or other conditions (or both) on loans made or 
insured under this part, do not impede or threaten to impede the 
carrying out of the purposes of this part or do not cause the return 
to holders of loans to be less than equitable, (2) that incentive 
payments on such loans are paid promptly to eligible lenders, and (3) 
that appropriate consideration of relative administrative costs and 
money market conditions is made in setting the quarterly rate of 
such payments, the Congress finds it necessary to establish an 
improved method for the determination of the quarterly rate of the 
special allowances on such loans, and to provide for a thorough, 
expeditious, and objective examination of alternative methods for 
the determination of the quarterly rate of such allowances. 
"(b) COMPUTATION AND PAYMENT.— 
"(1) QUARTERLY PAYMENT BASED ON UNPAID BALANCE.—A spe-
cial allowance shall be paid for each of the 3-month periods 
ending March 31, June 30, September 30, and December 31 of 
every year and the amount of such allowance paid to any holder 
with respect to any 3-month period shall be a percentage of the 
, 
average unpaid balance of principal (not including unearned 
" 
' 
interest added to principal) of all eligible loans held by such 
holder during such period. 
"(2) RATE OF SPECIAL ALLOWANCE.—(A) Subject to subpara-
graphs (B), (C), and (D) and paragraph (4), the special allowance 
paid pursuant to this subsection on loans shall be computed (i) 
by determining the average of the bond equivalent rates of 91-
day Treasury bills auctioned for such 3-month period, (ii) by 
subtracting the applicable interest rate on such loans from such 
average, (iii) by adding 3.25 percent to the resultant percent, 
and (iv) by dividing the resultant percent by 4. 
"(BXi) The quarterly rate of the special allowance for holders 
of loans which were made or purchased with funds obtained by 
the holder from the issuance of obligations, the income from 
which is exempt from taxation under the Internal Revenue 
20 use 1 et seq. 
Code of 1954 shall be one-half the quarterly rate of the special 
allowance established under subparagraph (A), except that, in 
determining the rate for the purpose of this division, subpara-
graph (AXiii) shall be applied by substituting '3.5 percent' for 
'3.25 percent'. Such rate shall also apply to holders of loans 
which were made or purchased with funds obtained by the 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1415 
holder from collections or default reimbursements on, or in-
terests or other income pertaining to, eligible loans made or 
purchased with funds described in the preceding sentence of 
this subparagraph or from income on the investment of such 
funds. This subparagraph shall not apply to loans which were 
made or insured prior to October 1,1980. 
"(ii) The rate set under division (i) shall not be less than (I) 2.5 
percent per year in the case of loans for which the applicable 
interest rate is 7 percent per year, (II) 1.5 percent per year in 
the case of loans for which the applicable interest rate is 8 
percent per year, or (III) 0.5 percent in the case of loans for 
which the applicable rate is 9 percent per year. 
"(iii) No special allowance may be paid under this subpara-
graph unless the issuer of such obligations complies with subsec-
tion (c) of this section. 
"(C) In the case of loans made pursuant to section 428A or 
428B for which the interest rate is determined under section 
427A(c)(4), a special allowance shall not be paid unless the rate 
determined for any 12-month period under subparagraph (B) of 
such section exceeds 12.5 percent. 
"(D)(i) In the case of loans made or purchased directly from 
funds loaned or advanced pursuant to a qualified State obliga-
tion, subparagraph (A)(iii) shall be applied by substituting '3.5 
percent' for *3.25 percent'. 
"(ii) For the purpose of division (i) of this subparagraph, the 
term 'qualified State obligation' means— 
"(I) an obligation of the Maine Educational Loan Market-
ing Corporation to the Student Loan Marketing Association 
pursuant to an agreement entered into on January 31,1984; 
or 
"(II) an obligation of the South Carolina Student Loan 
Corporation to the South Carolina National Bank pursuant 
to an agreement entered into on July 30,1986. 
"(3) CONTRACTUAL RIGHT OF HOLDERS TO SPECIAL ALLOWANCE.— 
The holder of an eligible loan shall be deemed to have a 
contractual right against the United States, during the life of 
such loan, to receive the special allowance according to the 
provisions of this section. The special allowance determined for 
any such 3-month period shall be paid promptly after the close 
of such period, and without administrative delay after receipt of 
an accurate and complete request for payment, pursuant to 
procedures established by regulations promulgated under this 
section. 
"(4) PENALTY FOR LATE PAYMENT.—(A) If payments of 
the 
special allowances payable under this section or of interest 
payments under section 428(a) with respect to a loan have not 
been made within 30 days after the Secretary has received an 
accurate, timely, and complete request for payment thereof, the 
special allowance payable to such holder shall be increased by 
an amount equal to the daily interest accruing on the special 
allowance and interest benefits payments due the holder. 
"(B) Such daily interest shall be computed at the daily equiva-
lent rate of the sum of the special allowance rate computed 
pursuant to paragraph (2) and the interest rate applicable to the 
loan and shall be paid for the later of (i) the 31st day after the 
receipt of such request for payment from the holder, or (ii) the 
31st day after the final day of the period or periods covered by 
100 STAT. 1416 
PUBLIC LAW 99-498—OCT. 17, 1986 
Reports. 
such request, and shall be paid for each succeeding day until, 
and including, the date on which the Secretary authorizes 
payment. 
"(C) For purposes of reporting to the Congress the amounts of 
special allowances paid under this section, amounts of special 
allowances paid pursuant to this paragraph shall be segregated 
and reported separately. 
"(5) DEFINITION OF ELIGIBLE LOAN.—As used in this section, 
the term 'eligible loan' means a loan— 
"(A)(i) on which a portion of the interest is paid on behalf 
of the student and for the student's account to the holder of 
the loan under section 428(a); 
r 
. f 
"(ii) which is made under section 428A, 428B, 428C, or 
439(0); or 
"(iii) which was made prior to October 1,1981; and 
"(B) which is insured under this part, or made under a 
program covered by an agreement under section 428(b) of 
this Act. 
"(6) REGULATION OF TIME AND MANNER OF PAYMENT.—The 
Secretary shall pay the holder of an eligible loan, at such time 
or times £is are specified in regulations, a special allowance 
prescribed pursuant to this subsection subject to the condition 
that such holder shall submit to the Secretary, at such time or 
' times and in such a manner as the Secretary may deem proper, 
such information as may be required by regulation for the 
purpose of enabling the Secretary to carry out his functions 
under this section and to carry out the purposes of this section. 
"(c) ORIGINATION FEES.— 
"(1) DEDUCTION FROM INTEREST AND SPECIAL ALLOWANCE SUB-
SIDIES.—Notwithstanding subsection (b), the total amount of 
interest and special allowance payable under section 428(a)(3)(A) 
^ and subsection (b) of this section, respectively, to any holder 
shall be reduced by the Secretary by the amount which the 
lender is authorized to charge as an origination fee in accord-
ance with paragraph (2) of this subsection. If the total amount of 
interest and special allowance payable under section 428(a)(3)(A) 
and subsection (b) of this section, respectively, is less than the 
amount the lender was authorized to charge borrowers for 
origination fees in that quarter, the Secretary shall deduct the 
excess amount from the subsequent quarters' payments until 
the total amount has been deducted. 
"(2) AMOUNT OF ORIGINATION FEES.—With respect to any loan 
(other than loans made under sections 428A, 428B, 428C, and 
439(o)) for which a completed note or other written evidence of 
the loan was sent or delivered to the borrower for signing on or 
after 10 days after the date of enactment of the Postsecondary 
Student Assistance Amendments of 1981, each eligible lender 
under this part is authorized to charge the borrower an origina-
tion fee in an amount not to exceed 5 percent of the principal 
amount of the loan, to be deducted proportionately from each 
installment payment of the proceeds of the loan prior to pay-
ment to the borrower. 
"(3) RELATION TO APPUCABLE INTEREST.—Such origination fee 
shall not be taken into account for purposes of determining 
compliance with section 427A. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1417 
"(4) DISCLOSURE REQUIRED.—The lender shall disclose to the 
borrower the amount and method of calculating the origination 
fee. 
"(5) PROHIBITION ON DEPARTMENT COMPELLING ORIGINATION 
FEE COLLECTIONS B
Y LENDERS.—Nothing in this subsection shall 
be construed to permit the Secretary to require any lender that 
is making loans that are insured or guaranteed under this part, 
but for which no amount will be payable for interest under 
section 428(aX3XA) or for special allowances under subsection (b) 
''• 
of this section, to collect any origination fee or to submit the 
sums collected as origination fees to the United States. The 
Secretary shall, not later than January 1, 1987, return to any 
such lender any such sums collected before the enactment of 
this paragraph, together with interest thereon. 
"(d) 
LENDING FROM PROCEEDS OF TAX EXEMPT OBUGATIONS.— 
"(1) PLAN FOR DOING BUSINESS REQUIRED.—In order for the state and local 
holders of loans any portion of which were made or purchased governments. 
1 
with funds obtained by the holder from an Authority issuing 
5 
obligations, the income from which is exempt from taxation 
under the Internal Revenue Code of 1954, to be eligible to 26 use l et seq. 
receive a special allowance under subsection (bX2) of this sec-
; 
tion, the Authority shall submit to the Governor of the State, 
and to the guaranty agency determined by the Secretary to be 
1 
the principal guaranty agency for the State, a plan for doing 
business. The Governor shall, after consultation with the guar-
anty agency, approve or disapprove the plan within 30 days of 
the receipt of the proposed plan from the Authority. Such plan 
J 
shall also be transmitted to the Secretary within 60 days after 
approval. 
"(2) CONTENTS OF PLAN.—Each such plan shall contain provi-
/1 r ~ sions designed to assure that— 
"(A) no eligible lender in the area served by the Author-
aj 4i* 
ity will be excluded from participation in the program of 
the Authority and all eligible lenders may participate in 
the program on the same terms and conditions if eligible 
9>^. 
lenders are going to participate in the program; 
"(B) no director or staff member of the Authority who 
receives compensation from the Authority may own stock 
in, or receive compensation from, any agency that would 
contract to service and collect the loans of the Authority; 
'J 
"(C) student loans will not be purchased from participat- 
-iu S'TU . 
*
^ 
ing lenders at a premium or discount amounting to more 
i 
than 1 percent of the unpaid principal amount borrowed 
plus accrued interest to the date of acquisition, but a 
' 
reasonable loan transfer fee may be paid by the purchaser; 
'i- 
"(D) the Authority will, within the limit of funds avail-
able and subject to the applicable State and Federal law, 
V 
make loans to, or purchase loans incurred by, all eligible 
"
t 
students who are residents of, or who attend an eligible 
"
? 
institution within, the area served by the Authority; 
- n ^ «s/i i 
i 
"(E) the Authority has a plan under which the Authority 
&
^
- 
will pursue the development of new lender participation in 
a continuing program of benefits to students together with 
assurances of existing lender commitments to the program; 
v i 
••••' 
a n d 
•••''^ 
"(F) there will be an annual audit of the Authority by a 
iL,'-' ' 
certified public accounting firm which will include review 
100 STAT. 1418 
PUBLIC LAW 99-498—OCT. 17, 1986 
of compliance by the Authority with the provisions of the 
plan. 
"(3) NONDISCRIMINATION.—In order for the holders of loans 
V 
which were made or purchased with funds obtained by the 
holder from an Authority issuing obligations, the income from 
which is exempt from taxation under the Internal Revenue 
26 use 1 et seq. 
Code of 1954, to be eligible to receive a special allowance under 
subsection Ot))(2) of this section on any such loans, the Authority 
shall not engage in any pattern or practice which results in a 
denial of a borrower's access to loans under this part because of 
the borrower's race, sex, color, religion, national origin, age, 
handicapped status, income, attendance at a particular eligible 
institution within the area served by the Authority, length of 
the borrower's educational program, or the borrower's academic 
year in school. 
"(4) REPORT BY THE SECRETARY.—The Secretary shall, no later 
than September 30, 1988, and each succeeding September 30th, 
r 
submit a report to the Committee on Education and Labor of 
the House of Representatives and the Committee on Labor and 
r - ' 
'
^ 
Human Resources of the Senate specifying— 
"(A) the amount of student loan credit provided through 
the use of tax-exempt obligations for the most recent fiscal 
year; 
I 
"(B) an assessment of the impact of the availability of 
such financing on the availability of student credit in the 
'" 
areas served by the authorities issuing such obligations; 
' 
"(C) an assessment of the need for additional tax-exempt 
financing for student credit for the next fiscal year, as 
evidenced by the information submitted under paragraph 
;.v " 
(2XG) of this subsection; and 
"(D) any other information determined by the Secretary 
to be relevant to the purposes of the report. 
"(e) 
REGULATIONS TO PREVENT DENIAL OF LOANS TO ELIGIBLE 
STUDENTS.—The Secretary shall adopt or amend appropriate regula-
tions pertaining to programs carried out under this part to prevent, 
where practicable, any practices which the Secretary finds have 
denied loans to a substantial number of eligible students. 
20 u s e 1087-2. 
Insurance. 
District of 
eolumbia. 
STUDENT LOAN MARKETING ASSOCIATION 
II 
"SEC. 439. (a) PURPOSE.—The Congress hereby declares that it is 
the purpose of this section (1) to establish a private corporation 
which will be financed by private capital and which will serve as a 
secondary market and warehousing facility for student loans, 
including loans which are insured by the Secretary under this part 
or by a guaranty agency, and which will provide liquidity for 
student loan investments; (2) in order to facilitate secured trans-
actions involving student loans, to provide for perfection of security 
interests in student loans either through the taking of possession or 
by notice filing; and (3) to assure nationwide the establishment of 
adequate loan insurance programs for students, to provide for an 
additional program of loan insurance to be covered by agreements 
with the Secretary. 
"Ot)) ESTABUSHMENT.— 
"(1) IN GENERAL.—There is hereby created a body corporate to 
be known as the Student Loan Marketing Association (herein-
after referred to as the 'Association'). The Association shall 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1419 
have succession until dissolved. It shall maintain its principal 
office in the District of Columbia and shall be deemed, for 
purposes of venue and jurisdiction in civil actions, to be a 
resident and citizen thereof. Offices may be established by the 
Association in such other place or places as it may deem 
necessary or appropriate for the conduct of its business. 
"(2) EXEMPTION FROM STATE AND LOCAL TAXES.—The Associa-
tion, including its franchise, capital, reserves, surplus, mort-
gages, or other security holdings, and income shall be exempt 
from all taxation now or hereafter imposed by any State, terri-
tory, possession. Commonwealth, or dependency of the United 
States, or by the District of Columbia, or by any county, munici-
pality, or local taxing authority, except that any real property 
of the Association shall be subject to State, territorial, county, 
municipal, or local taxation to the same extent according to its 
value as other real property is taxed. 
"(3) APPROPRIATIONS AUTHORIZED FOR ESTABUSHMENT.—There 
is hereby authorized to be appropriated to the Secretary 
$5,000,000 for making advances for the purpose of helping to 
establish the Association. Such advances shall be repaid within 
such period as the Secretary may deem to be appropriate in 
light of the maturity and solvency of the Association. Such 
advances shall bear interest at a rate not less than (A) a rate 
determined by the Secretary of the Treasury taking into consid-
eration the current average market yield on outstanding 
marketable obligations of the United States with remaining 
period to maturity comparable to the maturity of such ad-
vances, adjusted to the nearest one-eighth of 1 percent, plus (B) 
an allowance adequate in the judgment of the Secretary to cover 
administrative costs and probable losses. Repayments of such 
advances shall be deposited into miscellaneous receipts of the 
Treasury. 
"(c) BOARD OF DIRECTORS.— 
"(1) BOARD MEMBERSHIP.—The Association shall have a Board 
of Directors which shall consist of twenty-one persons, one of 
whom shall be designated Chairman by the President. 
"(2) INTERIM BOARD.—An interim Board of Directors shall be 
appointed by the President, one of whom he shall designate an 
interim Chairman. The interim Board shall consist of twenty-
one members, seven of whom shall be representative of banks or 
other financial institutions which are insured lenders pursuant 
to this section, seven of whom shall be representative of edu-
cational institutions, and seven of whom shall be representative 
of the general public. The interim Board shall arrange for an 
initial offering of common and preferred stocks and take what-
ever other actions are necessary to proceed with the operations 
of the Association. 
"(3) REGULAR BOARD.—When, in the judgment of the Presi-
dent, sufficient common stock of the Association has been pur-
cheised by educational institutions and banks or other 
financial 
^j^ 
,?., 
institutions, the holders of common stock which are educational 
institutions shall elect seven members of the Board of Directors 
and the holders of common stock which are banks or other 
financial institutions shall elect seven members of the Board of 
Directors. The President shall appoint the remaining seven 
directors, who shall be representative of the general public. 
100 STAT. 1420 
PUBLIC LAW 99-498—OCT. 17,1986 
Irc!. 
"(4) SUCCESSION OF REGULAR BOARD.—At the time the events 
described in paragraph (3) have occurred, the interim Board 
shall turn over the affairs of the Association to the regular 
Board so chosen or appointed. 
"(5) TERMS OF APPOINTED AND ELECTED MEMBERS.—The direc-
tors appointed by the President shall serve at the pleasure of 
the President and until their successors have been appointed 
and have qualified. The remaining directors shall each be 
elected for a term ending on the date of the next annual 
meeting of the common stockholders of the Association, and 
shall serve until their successors have been elected and have 
qualified. Any appointive seat on the Board which becomes 
vacant shall be filled by appointment of the President. Any 
elective seat on the Board which becomes vacant after the 
annual election of the directors shall be filled by the Board, but 
only for the unexpired portion of the term. 
"(6) MEETINGS AND FUNCTIONS OF BOARD.—The Board of Direc-
tors shall meet at the call of its Chairman, but at least semi-
annually. The Board shall determine the general policies which 
shall govern the operations of the Association. The Chairman of 
the Board shall, with the approval of the Board, select, appoint, 
and compensate qualified persons to fill the offices as may be 
provided for in the bylaws, with such executive functions, 
powers, and duties as may be prescribed by the bylaws or by the 
Board of Directors, and such persons shall be the executive 
officers of the Association and shall discharge all such executive 
functions, powers, and duties. 
"(d) AUTHORITY OF ASSOCIATION.— 
"(1) IN GENERAL.—The Association is authorized, subject to 
the provisions of this section— 
"(A) pursuant to commitments or otherwise to make 
advances on the security of, purchase, or repurchase, serv-
ice, sell or resell, offer participations, or pooled interests or 
otherwise deal in, at prices and on terms and conditions 
determined by the Association, student loans which are 
insured by the Secretary under this part or by a guaranty 
e- " ^ 
agency; 
"(B) to buy, sell, hold, underwrite, and otherwise deal in 
obligations, if such obligations are issued, for the purpose of 
making or purchasing insured loans, by a guaranty agency 
or by an eligible lender in a State described in section 
435(dXl)(D)or(F); 
"(C) to buy, sell, hold, insure, underwrite, and otherwise 
deal in obligations issued for the purpose of financing or 
refinancing the construction, reconstruction, renovation, or 
purchase of educational and training facilities and housing 
for students £ind faculties (including the underl3dng real 
^ 
property), and related equipment, instrumentation, and fur-
nishings; 
Insurance. 
"(D) to undertake a program of loan insurance pursuant 
to agreements with the Secretary under section 428, and 
except with respect to loans under subsection (o) of this 
section or under section 428C, the Secretary may enter into 
an agreement with the Association for such purpose only if 
^
* 
the Secretary determines that (i) eligible borrowers are 
seeking and unable to obtain loans under this part, and (ii) 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1421 
no guaranty agency is capable of or willing to provide a 
program of loan insurance for such borrowers; and 
"(E) to undertake any other activity which the Board of 
Directors of the Association determines to be in furtherance 
of the programs of insured student loans authorized under 
this part or will otherwise support the credit needs of 
students, except that— 
"(i) in carrying out all such activities the purpose 
shall always be to provide secondary market and other 
support for lending programs offered by other organiza-
tions and not to replace or compete with such other 
programs; 
i 
"(ii) nothing in this subparagraph (E) shall be 
deemed to authorize the Association to acquire, own, 
operate, or control any bank, savings and loan associa-
tion, savings bank or credit union; and 
"(iii) not later than 30 days prior to the initial im-
rj 
plementation of a program undertaken pursuant to 
this subparagraph (E), the Association shall advise the 
Chairman and the Ranking Member on the Committee 
V 
on Human Resources of the Senate and the Chairman 
and the Ranking Member of the Committee on Edu-
cation and Labor of the House of Representatives in 
writing of its plans to offer such program and shall 
provide information relating to the general terms and 
conditions of such program. 
j 
The Association is further authorized to undertake any activity 
with regard to student loans which are not insured or guaran-
teed as provided for in this subsection £is it may undertake with 
regard 
to insured 
or guaranteed 
student 
loans. Any 
warehousing advance made on the security of such loans shall 
be subject to the provisions of paragraph (3) of this subsection to 
the same extent as a warehousing advance made on the security 
of insured loans. 
"(2) WAREHOUSING ADVANCES.—Any warehousing advance 
made under paragraph (IXA) of this subsection shall be made on 
the security of (A) insured loans, (B) marketable obligations and 
securities issued, guaranteed, or insured by, the United States, 
or for which the full faith and credit of the United States is 
pledged for the repayment of principal and interest thereof, or 
(C) marketable obligations issued, guaranteed, or insured by any 
s, 
agency, instrumentality, or corporation of the United States for 
q 
which the credit of such agency, instrumentality, or corporation 
i, 
is pledged for the repayment of principal and interest thereof, 
in an amount equal to the amount of such advance. The pro-
- 
ceeds of any such advance secured by insured loans shall either 
be invested in additional insured loans or the lender shall 
provide assurances to the Association that during the period of 
the borrowing it will maintain a level of insured loans in its 
portfolio not less than the aggregate outstanding balance of 
such loans held at the time of the borrowing. The proceeds from 
h 
any such advance secured by collateral described in clauses (B) 
and (C) shall be invested in additional insured student loans. 
"(3) PERFECTION OF SECURITY INTERESTS IN STUDENT LOANS.— 
Notwithstanding the provisions of any State law to the con-
trary, including the Uniform Commercial Code as in effect in 
^i^ 
any State, a security interest in insured student loans created 
Securities. 
State and local 
governments. 
100 STAT. 1422 
PUBLIC LAW 99-498—OCT. 17, 1986 
' * on behalf of the Association or any eligible lender as defined in 
section 435(a) may be perfected either through the taking of 
'^* 
possession of such loans or by the filing of notice of such 
security interest in such loans in the manner provided by such 
State law for perfection of security interests in accounts. 
"(4) FORM OF SECURITIES.—Securities issued pursuant to the 
offering of participations or pooled interests under paragraph 
(1) of this subsection may be in the form of debt obligations, or 
trust certificates of beneficial ownership, or both. Student loans 
set aside pursuant to the offering of participations or pooled 
interests shall at all times be adequate to ensure the timely 
principal and interest pa)mients on such securities. 
• 
"(5) RESTRICTIONS ON FACIUTIES AND HOUSING ACTIVITIES.—Not 
less than 75 percent of the aggregate dollar amount of obliga-
tions bought, sold, held, insured, underwritten, and otherwise 
supported in accordance with the authority contained in para-
graph (IXC) shall be obligations which are listed by a nationally 
recognized statistical rating organization at a rating below the 
third highest rating of such organization. 
Securities. 
"(e) ADVANCES TO LENDERS T H A T D O N O T DISCRIMINATE.—The 
Association, pursuant to such criteria as the Board of Directors may 
prescribe, shall make advances on security or purchase student 
loans pursuant to subsection (d) only after the Association is assured 
that the lender (1) does not discriminate by pattern or practice 
against any particular class or category of students by requiring 
that, as a condition to the receipt of a loan, the student or his family 
maintain a business relationship with the lender, except that this 
clause shall not apply in the case of a loan made by a credit union, 
savings and loan association, mutual savings bank, institution of 
higher education, or any other lender with less than $75,000,000 in 
deposits, and (2) does not discriminate on the beisis of race, sex, color, 
creed, or national origin. 
"(f) STOCK OF THE ASSOCIATION.— 
"(1) COMMON STOCK TO INSURED LENDERS AND ELIGIBLE INSTITU-
" '^"'^ '- 
TiONS ONLY.—The Association shall have common stock having 
such par value as may be fixed by its Board of Directors from 
time to time which may be issued only to lenders under this 
part, pertaining to guaranteed student loans, who are qualified 
as insured lenders under this part or who are eligible institu-
tions, as defined in section 435(a), other than an institution 
outside of the United States. 
"(2) VOTING RIGHTS.—Each share of common stock shall be 
entitled to one vote with rights of cumulative voting at all 
elections of Directors. Voting shall be by classes as described in 
subsection (c)(3). 
"(3) NUMBER OF SHARES; TRANSFERABIUTY.—The maximum 
number of shares of common stock that the Association may 
issue and have outstanding at any one time shall be fixed by the 
Board of Directors from time to time. Any common share issued 
shall be fully transferable, except that, as to the Association, it 
shall be transferred only on the books of the Association. 
"(4) DIVIDENDS.—To the extent that net income is earned and 
realized, subject to subsection (gX2), dividends may be declared 
'' 
on common stock and nonvoting common stock by the Board of 
Directors. Such dividends as may be declared by the Board shall 
be paid to the holders of outstanding shares of common stock 
and nonvoting common stock, except that no such dividends 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1423 
shall be payable with respect to any share which has been 
called for redemption past the effective date of such call. 
"(5) NONVOTING COMMON STOCK.—The Association is au-
thorized to issue nonvoting common stock having such par 
value as may be fixed by its Board of Directors from time to 
time. Any nonvoting common stock shall be freely transferable, 
except that, as to the Association, it shall be transferable only 
on the books of the Association. 
"(g) PREFERRED STOCK.— 
"(1) AUTHORITY OF BOARD.—The Association is authorized to 
issue nonvoting preferred stock having such par value as may 
be fixed by its Board of Directors from time to time. Any 
preferred share issued shall be freely transferable, except that, 
as to the Association, it shall be transferred only on the books of 
the Association. 
"(2) RIGHTS OF PREFERRED STOCK.—The holders of the pre-
ferred shares shall be entitled to such rate of cumulative divi-
dends and such shares shall be subject to such redemption or 
other conversion provisions as may be provided for at the time 
of issuance. No dividends shall be payable on any share of 
common stock at any time when any dividend is due on any 
share of preferred stock and has not been paid. 
"(3) PREFERENCE ON TERMINATION OF BUSINESS.—In the event 
of any liquidation, dissolution, or winding up of the Associa-
tion's business, the holders of the preferred shares shall be paid 
in full at par value thereof, plus all accrued dividends, before 
the holders of the common shares receive any payment. 
"(h) DEBT OBUGATIONS.— 
"(1) APPROVAL BY SECRETARIES OF EDUCATION AND THE TREAS-
URY.—The Association is authorized with the approval of the 
Secretary of Education and the Secretary of the Treasury to 
issue and have outstanding obligations having such maturities 
and bearing such rate or rates of interest as may be determined 
by the Association. The authority of the Secretary of Education 
to approve the issuance of such obligations is limited to obliga-
tions issued by the Association and guaranteed by the Secretary 
pursuant to paragraph (2) of this subsection. Such obligations 
may be redeemable at the option of the Association before 
maturity in such manner as may be stipulated therein. The 
Secretary of the Treasury may not direct as a condition of his 
approval that any such issuance of obligations by the Associa-
tion be made or sold to the Federal Financing Bank. To the 
extent that the average outstanding amount of the obligations 
-"Ju:iimB 
owned by the Association pursuant to the authority contained 
in subsection (dXD (B) and (C) of this section and as to which the 
income is exempt from taxation under the Internal Revenue 
Code of 1954 does not exceed the average stockholders' equity of 26 use l et seq. 
the Association, the interest on obligations issued under this 
paragraph shall not be deemed to be interest on indebtedness 
incurred or continued to purchase or carry obligations for the 
purpose of section 265 of the Internal Revenue Code of 1954. 26 USC 265. 
"(2) GUARANTEE OF DEBT.—The Secretary is authorized, prior 
to October 1, 1984, to guarantee payment when due of principal 
and interest on obligations issued by the Association in an 
aggregate amount determined by the Secretary in consultation 
with the Secretary of the Treasury. Nothing in this section shall 
be construed so as to authorize the Secretary of Education or 
100 STAT. 1424 
PUBLIC LAW 99-498—OCT. 17, 1986 
Securities. 
31 u s e 774. 
the Secretary of the Treasury to limit, control, or constrain 
programs of the Association or support of the Guaranteed Stu-
dent Loan Program by the Association. 
"(3) 
BORROWING AUTHORITY TO MEET GUARANTEE OBLIGA-
TIONS.—To enable the Secretary to discharge his responsibilities 
under guarantees issued by him, he is authorized to issue to the 
Secretary of the Treasury notes or other obligations in such 
forms and denominations, bearing such maturities, and subject 
to such terms and conditions, £is may be prescribed by the 
Secretary with the approval of the Secretary of the Treasury. 
Such notes or other obligations shall bear interest at a rate 
determined by the Secretary of the Treasury, taking into consid-
eration the current average market yield on outstanding 
marketable obligations of the United States of comparable 
maturities during the months preceding the issuance of the 
notes or other obligations. The Secretary of the Treasury is 
authorized and directed to purchase any notes and other obliga-
tions issued hereunder and for that purpose he is authorized to 
use as a public debt transaction the proceeds from the sale of 
any securities issued under the Second Liberty Bond Act, as 
amended, and the purposes for which securities may be issued 
under that Act, as amended, are extended to include any pur-
cheise of such notes and obligations. The Secretary of the Treas-
ury may at any time sell any of the notes or other obligations 
acquired by him under this subsection. All redemptions, pur-
chases, and sales by the Secretary of the Treasury of such notes 
or other obligations shall be treated as public debt transactions 
of the United States. There is authorized to be appropriated to 
the Secretary such sums as may be necessary to pay the prin-
cipal and interest on the notes or obligations issued by him to 
the Secretary of the Treasury. 
"(4) ACTION ON REQUEST FOR GUARANTEES.—Upon receipt of a 
request from the Association under this subsection requiring 
approvals by the Secretary of Education or the Secretary of the 
Treasury, the Secretary of Education or the Secretary of the 
Treasury shall act promptly either to grant approval or to 
advise the Association of the reasons for withholding approval. 
In no case shall such an approval be withheld for a period 
longer than 60 days unless, prior to the end of such period, the 
Secretary of Education and the Secretary of the Treasury 
submit to the Congress a detailed explanation of reasons for 
doing so. 
"(5) AUTHORITY OP TREASURY TO PURCHASE DEBT,—The Sec-
retary of the Treasury is authorized to purchase any obligations 
issued by the Association pursuant to this subsection as now or 
hereafter in force, and for such purpose the Secretary of the 
Treasury is authorized to use as a public debt transaction the 
proceeds of the sale of any securities hereafter issued under the 
Second Liberty Bond Act, as now or hereafter in force, and the 
purposes for which securities may be issued under the Second 
Liberty Bond Act, as now or hereafter in force are extended to 
include such purchases. The Secretary of the Treasury shall not 
at any time purchase any obligations under this subsection if 
such purchase would increase the aggregate principal amount 
of his then outstanding holdings of such obligations under this 
subsection to an amount greater than $1,000,000,000. Each pur-
chase of obligations by the Secretary of the Treasury under this 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1425 
subsection shall be upon such terms and conditions as to yield a 
return at a rate determined by the Secretary of the Treasury, 
taking into consideration the current average rate on outstand-
ing marketable obligations of the United States of comparable 
maturities as of the last day of the month preceding the making 
of such purchase. The Secretary of the Treasury may, at any 
time, sell, upon such terms and conditions and at such price or 
prices as he shall determine, any of the obligations acquired by 
him under this subsection. All redemptions, purchases, and 
sales by the Secretary of the Treasury of such obligations under 
this subsection shall be treated as public debt transactions of 
the United States. 
"(6) SALE OF DEBT TO FEDERAL FINANCING BANK.—Notwith-
standing any other provision of law the Association is au-
thorized to sell or issue obligations on the security of student 
loans, the payment of interest or principal of which has at any 
time been guaranteed under section 428 or 429 of this part, to 
the Federal Financing Bank. 
"(i) GENERAL CORPORATE POWERS.—The Association shall have 
power— 
"(1) to sue and be sued, complain and defend, in its corporate 
name and through its own counsel; 
"(2) to adopt, alter, and use the corporate seal, which shall be 
judicially noticed; 
"(3) to adopt, amend, and repeal by its Board of Directors, 
bylaws, rules, and regulations as may be necessary for the 
conduct of its business; 
"(4) to conduct its business, carry on its operations, and have 
! officers and exercise the power granted by this section in any 
State without regard to any qualification or similar statute in 
any State; 
"(5) to lease, purchase, or otherwise acquire, own, hold, im-
prove, use, or otherwise deal in and with any property, real, 
personal, or mixed, or any interest therein, wherever situated; 
"(6) to accept gifts or donations of services, or of property, 
ur«^ 
real, personal, or mixed, tangible or intangible, in aid of any of 
the purposes of the Association; 
"(7) to sell, convey, mortgage, pledge, lease, exchange, and 
otherwise dispose of its property and assets; 
"(8) to appoint such officers, attorneys, employees, and agents 
as may be required, to determine their qualifications, to define 
J i: 
their duties, to fix their salaries, require bonds for them, and fix 
the penalty thereof; and 
"(9) to enter into contracts, to execute instruments, to incur 
liabilities, and to do all things as are necessary or incidental to 
the proper management of its affairs and the proper conduct of 
its business. 
"0) ACCOUNTING, AUDITING, AND REPORTING.—The accounts of the 
Association shall be audited annually. Such audits shall be con-
ducted in accordance with generally accepted auditing standards by 
independent certified public accountants or by independent licensed 
public accountants, licensed on or before December 81,1970, who are 
certified or licensed by a regulatory authority of a State or other 
political subdivision of the United States, except that independent 
public accountants licensed to practice by such regulatory authority 
after December 31, 1970, and persons who, although not so certified 
or licensed, meet, in the opinion of the Secretary, standards of 
100 STAT. 1426 
PUBLIC LAW 99-498—OCT. 17, 1986 
Reports. 
Securities. 
12 use 355. 
education and experience representative of the highest standards 
prescribed by the licensing authorities of the several States which 
provide for the continuing licensing of public accountants and which 
are prescribed by the Secretary in appropriate regulations may 
perform such audits until December 31, 1975. A report of each such 
audit shall be furnished to the Secretary of the Treasury. The audit 
shall be conducted at the place or places where the accounts are 
normally kept. The representatives of the Secretary shall have 
access to all books, accounts, financial records, reports, files, and all 
other papers, things, or property belonging to or in use by the 
Association and necessary to facilitate the audit, and they shall be 
afforded full facilities for verifying transactions with the balances or 
securities held by depositaries, fiscal agents, and custodians. 
"(k) REPORT ON AUDITS BY TREASURY.—A report of each such audit 
for a fiscal year shall be made by the Secretary of the Treasury to 
the President and to the Congress not later than 6 months following 
the close of such fiscal year. The report shall set forth the scope of 
the audit and shall include a statement (showing intercorporate 
relations) of assets and liabilities, capital and surplus or deficit; a 
statement of surplus or deficit analysis; a statement of income and 
expense; a statement of sources and application of funds; and such 
comments and information as may be deemed necessary to keep the 
President and the Congress informed of the operations and financial 
condition of the Association, together with such recommendations 
with respect thereto as the Secretary may deem advisable, including 
a report of any impairment of capital or lack of sufficient capital 
noted in the audit. A copy of each report shall be furnished to the 
Secretary, and to the Association. 
"(1) LAWFUL INVESTMENT INSTRUMENTS; EFFECT OF AND EXEMP-
TIONS FROM OTHER LAWS.—All obligations issued by the Association 
including those made under subsection (d)(4) shall be lawful invest-
ments, and may be accepted as security for all fiduciary, trust, and 
public funds, the investment or deposit of which shall be under 
authority or control of the United States or of any officer or officers 
thereof. All stock and obligations issued by the Association pursuant 
to this section shall be deemed to be exempt securities within the 
meaning of laws administered by the Securities and Exchange 
Commission, to the same extent as securities which are direct 
obligations of, or obligations guaranteed as to principal or interest 
by, the United States. The Association shall, for the purposes of 
section 14(b)(2) of the Federal Reserve Act, be deemed to be an 
agency of the United States. The obligations of the Association shall 
be deemed to be obligations of the United States for the purpose of 
section 3124 of title 31, United States Code. For the purpose of the 
distribution of its property pursuant to section 726 of title 11, United 
States Code, the Association shall be deemed a person within the 
meaning of such title. The priority established in favor of the United 
States by section 3713 of title 31, United States Code, shall not 
establish a priority over the indebtedness of the Association issued 
or incurred on or before September 30, 1992. The Federal Reserve 
Banks are authorized to act as depositaries, custodians, or fiscal 
agents, or a combination thereof, for the Association in the general 
performance of its powers under this section. 
"(m) PREPARATION OF OBUGATIONS.—In order to furnish obliga-
tions for delivery by the Association, the Secretary of the Treasury 
is authorized to prepare such obligations in such form as the Board 
of Directors may approve, such obligations when prepared to be held 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1427 
in the Treasury subject to delivery upon order by the Association. 
The engraved plates, dies, bed pieces, and so forth, executed in 
connection therewith shall remain in the custody of the Secretary of 
the Treasury. The Association shall reimburse the Secretary of the 
Treasury for any expenditures made in the preparation, custody, 
and delivery of such obligations. The Secretary of the Treasury is 
authorized to promulgate regulations on behalf of the Association so 
that the Association may utilize the book-entry system of the Fed-
eral Reserve Banks. 
"(n) REPORT ON OPERATIONS AND ACTIVITIES.—The Association 
shall, as soon as practicable after the end of each fiscal year, 
transmit to the President and the Congress a report of its operations 
and activities during each year. 
"(o) LOAN CONSOUDATIONS.— 
"(1) IN GENERAL.—The Association or its designated agent 
may, upon request of a borrower, consolidate loans received 
under this title in accordance with section 428C. 
"(2) USE OF EXISTING AGENCIES AS AGENT.—The Association in 
State and local 
making loans pursuant to this subsection in any State served by 
governments. 
a guaranty agency or an eligible lender in a State described in 
section 435(dXl) (D) or (F) may designate as its agent such 
agency or lender to perform such functions as the Association 
determines appropriate. Any agreements made pursuant to this 
subparagraph shall be on such terms and conditions as agreed 
upon by the Association and such agency or lender, 
"(p) ADVANCES FOR DIRECT LOANS BY GUARANTY AGENCIES.^ 
"(1) IN GENERAL.—The Association shall make advances in 
each fiscal year from amounts available to it to each guaranty 
agency and eligible lender described in subsection 428(h)(1) 
which has an agreement with the Association which sets forth 
that advances are necessary to enable such agency or lender to 
make student loans in accordance with section 428(h) and that 
such advances will be repaid to the Association in accordance 
with such terms and conditions as may be set forth in the 
agreement and agreed to by the Association and such agency or 
lender. Advances made under this subsection shall not be sub-
ject to subsection (d)(2) of this section. 
"(2) LIMITATION.—No advance may be made under this 
subsection unless the guaranty agency or lender makes an 
application to the Association, which shall be accompanied by 
such information as the Association determines to be reason-
ably necessary, 
"(q) LENDER OF LAST RESORT.— 
State and local 
"(1) ACTION AT REQUEST OF SECRETARY.—(A) Whenever the 
governments. 
Secretary determines that eligible borrowers in a State not 
served by a guaranty agency or an eligible lender in a State 
described in section 435(dXl) (D) or (F) are seeking and are 
unable to obtain loans under this part, the Association or its 
designated agent may begin making loans in accordance with 
this subsection at the request of the Secretary. The Association 
shall give preference to such States in making loans under this 
subsection. 
"(B) Loans made pursuant to this subsection shall be insur- 
Insurance, 
able by the Secretary under section 429 with a certificate of 
comprehensive insurance coverage provided for under section 
429(bXl). 
71-19A 0 -
12 : QL. 3 Part2 
100 STAT. 1428 
PUBLIC LAW 99-498—OCT. 17, 1986 
State and local 
governments. 
State and local 
governments. 
20 u s e 1071 
note. 
"(2) ISSUANCE AND COVERAGE OF LOANS,—(A) Whenever the 
Secretary, after consultation with, and with the agreement of, 
representatives of the guaranty agency in a State, or an eligible 
lender in a State described in section 435(d)(1)(D), determines 
that a substantial portion of eligible borrowers in such State or 
within an area of such State are seeking and are unable to 
obtain loans under this part, the Association or its designated 
agent may begin making loans in accordance with this subsec-
tion at the request of the Secretary. 
"(B) Loans made pursuant to this subsection shall be insur-
able by the agency identified in subparagraph (A) having an 
agreement pursuant to section 428(b). For loans insured by such 
agency, the agency shall provide the Association with a certifi-
cate of comprehensive insurance coverage, if the Association 
and the agency have mutually agreed upon a means to deter-
mine that the agency has not already guaranteed a loan under 
this part to a student which would cause a subsequent loan 
made by the Association to be in violation of any provision 
under this part. 
"(3) TERMINATION OF LENDING.—The Association or its des-
ignated agent shall cease making loans under this part in any 
State at such time as it is determined by the Secretary, with 
regard to loans made under paragraph (1), or by any party to 
the agreement required by paragraph (2), that— 
"(A) the conditions which caused the implementation of 
this subsection have ceased to exist; or 
( 
"(B) the implementation of this subsection has either (i) 
further reduced the availability of loans from other sources 
in the applicable geographical area, or (ii) inhibited the 
formation in a State of an agency which would have an 
agreement pursuant to section 428(b) of this part which 
would have the responsibility of developing local sources of 
funds for student loans.". 
(b) EFFECTIVE DATES.—The changes made in part B of title IV of 
the Act by the amendment made by subsection (a) of this section 
shall take effect on the date of enactment of this Act, except— 
(1) as otherwise provided in such part B; 
(2) the changes in sections 427(a)(2)(C) and 428(bXlXM) of the 
Act (other than clause (ix) of each such section) shall apply only 
to loans made to cover the costs of instruction for periods of 
enrollment beginning on or after July 1,1987, to individuals who 
are new borrowers on that date; 
(3) the changes made in sections 425(a), 428(bXlXA), and 
.; 428(bXlXB) of the Act shall apply with respect only to loans 
". made to cover the costs of instruction for periods of enrollment 
beginning on or after January 1,1987; 
(4) the changes made in subsections (a), (b), and (d) of section 
^ 433 of the Act shall apply with respect only to loans made to 
cover the costs of instruction for periods of enrollment begin-
ning on or after January 1,1987; 
(5) the changes in section 428(bXlXH) shall apply with respect 
' only to loans for which the borrower files an application on or 
,^ after July 1,1987; 
(6) the changes in sections 435(dX5) and 438(d) of the Act shall 
take effect 30 days after the date of enactment of this Act; and 
*' 
(7) the changes made in section 438(b) shall take effect with 
respect to loans made to cover the costs of instruction for 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1429 
periods of enrollment beginning on or after 30 days after the 
date of enactment of this Act. 
(c) CHANGES EFFECTIVE WITHOUT REGARD TO REGULATIONS; RE-
PUBUCATION OF REGULATIONS.—The changes made in part B of title 
IV of the Act by the amendment made by subsection (a) of this 
section shall be effective in accordance with subsection (b) of this 
section without regard to whether such changes are reflected in the 
regulations prescribed by the Secretary of Education for the purpose 
of such part. 
(d) NEW BORROWERS.—For the purpose of this section, the term 
"new borrower" means, with respect to any date, an individual who 
on that date has no outstanding balance of principal or interest 
owing on any loan made, insured, or guaranteed under part B of 
title IV of the Act. 
SEC. 403. WORK STUDY REAUTHORIZED. 
(a) AMENDMENT.—Part C of title IV of the Act is amended to read 
as follows: 
"PART C—WORK-STUDY PROGRAMS 
20 u s e 1071 
note. 
20 use 1071 
note. 
PURPOSE; APPROPRIATIONS AUTHORIZED 
"SEC. 441. (a) PURPOSE.—The purpose of this part is to stimulate 
and promote the part-time employment of students who are enrolled 
as undergraduate, graduate, or professional students and who are in 
need of earnings from employment to pursue courses of study at 
eligible institutions. 
"(b) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 
be appropriated to carry out this part $656,000,000 for flscal year 
1987 and such sums as may be necessary for each of the 4 succeeding 
fiscal years. 
"ALLOCATION OF FUNDS 
"SEC. 442. (a) ALLOCATION BASED ON PREVIOUS ALLOCATION.—(1) 
From the amount appropriated pursuant to section 441(b) for each 
flscal year, the Secretary shall flrst allocate to each eligible institu-
tion for each succeeding flscal year, an amount equal to 100 percent 
of the amount such institution received and used under this part for 
flscal year 1985. 
"(2)(A) From the amount so appropriated, the Secretary shall next 
allocate to each eligible institution that began participation in the 
program under this part after flscal year 1985 but is not a flrst or 
second time participant, an amount equal to the greater of— 
"(i) $5,000; or 
"(ii) 90 percent of the amount received and used under this 
part for the flrst year it participated in the program. 
"(B) From the amount so appropriated, the Secretary shall next 
allocate to each eligible institution that began participation in the 
program under this part after fiscal year 1985 and is a first or 
second time participant, an amount equal to the greatest of— 
"(i) $5,000; 
"(ii) an amount equal to (I) 90 percent of the amount received 
and used under this part in the second preceding fiscal year by 
eligible institutions offering comparable programs of instruc-
% tion, divided by (II) the number of students enrolled at such 
y 
comparable institutions in such fiscal year, multiplied by (III) 
42 use 2751. 
42 use 2752. 
100 STAT. 1430 
PUBLIC LAW 99-498—OCT. 17, 1986 
the number of students enrolled at the applicant institution in 
such fiscal year; or 
'P'j ' 
"(iii) 90 percent of the institution's allocation under this part 
for the preceding fiscal year. 
"(C) Notwithstanding subparagraphs (A) and (B) of this para-
graph, the Secretary shall allocate to each eligible institution 
which— 
"(i) was a first-time participant in the program in fiscal year 
1986 or any subsequent fiscal year, and 
, >
f
; ;i. 
"(ii) received a larger amount under this subsection in the 
e 
second year of participation, 
an amount equal to 90 percent of the amount it received under this 
subsection in its second year of participation. 
"(3)(A) If the amount appropriated for any fiscal year is less than 
the amount required to be allocated to all institutions under para-
graph (1) of this subsection, then the amount of the allocation to 
each such institution shall be ratably reduced. 
"(B) If the amount appropriated for any fiscal year is more than 
the amount required to be allocated to all institutions under para-
graph (1) but less than the amount required to be allocated to all 
institutions under paragraph (2), then— 
"(i) the Secretary shall allot the amount required to be allo-
, J
, ; 
cated to all institutions under paragraph (1), and 
"(ii) the amount of the allocation to each institution under 
paragraph (2) shall be ratably reduced. 
"(C) If additional amounts are appropriated for any such fiscal 
year, such reduced amounts shall be increased on the same basis as 
they were reduced (until the amount allocated equals the amount 
required to be allocated under paragraphs (1) and (2) of this 
subsection). 
"(b) ALLOCATION OF EXCESS BASED ON PRO RATA SHARE.—From 
one-quarter of the remainder of the amount appropriated pursuant 
to section 441(b) for any fiscal year (after making the allocations 
, . 
; f 
required by subsection (a)), the Secretary shall allocate to each 
' 
a* eligible institution an amount which bears the same ratio to such 
one-quarter as the amount the eligible institution receives for such 
fiscal year under subsection (a) bears to the amount all such institu-
tions receive under such subsection (a). 
"(c) ALLOCATION OF EXCESS BASED ON SHARE OF EXCESS EUGIBLE 
AMOUNTS.—(1) From three-quarters of the remainder of the amount 
appropriated pursuant to section 441(b) after making the allocations 
required by subsection (a), the Secretary shall allocate to each 
eligible institution which has an excess eligible amount an amount 
which bears the same ratio to such remainder as such excess eligible 
amount bears to the sum of the excess eligible amounts of all such 
eligible institutions (having such excess eligible amounts). 
"(2) For any eligible institution, the excess eligible amount is the 
amount, if any, by which— 
"(A)(i) the amount of that institution's need (as determined 
under subsection (d)), divided by (ii) the sum of the need of all 
institutions (as so determined), multiplied by (iii) the amount 
appropriated pursuant to section 441(b) for the fiscal year; 
i'* exceeds 
"(B) the amount required to be allocated to that institution 
under subsection (a). 
"(d) DETERMINATION OF INSTITUTION'S NEED.—(1) The amount of 
an institution's need is equal to the sum of the self-help need of the 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1431 
institution's eligible undergraduate students and the self-help need 
of the institution's eligible graduate and professional students. 
"(2) To determine the self-help need of an institution's eligible 
undergraduate students, the Secretary shall— 
"(A) establish various income categories for dependent and 
independent undergraduate students; 
"(B) establish an expected family contribution for each 
income category of dependent and independent undergraduate 
students, determined on the basis of the average expected 
family contribution (computed in accordance with part F of this 
title) of a representative sample within each income category 
for the second preceding fiscal year; 
"(C) compute 25 percent of the average cost of attendance for 
g 
all undergraduate students; 
"(D) multiply the number of eligible dependent students in 
each income category by the lesser of— 
"(i) 25 percent of the average cost of attendance for all 
undergraduate students determined under subparagraph 
(C);or 
"(ii) the average cost of attendance for all undergraduate 
students minus the expected family contribution deter-
mined under subparagraph (B) for that income category, 
except that the amount computed by such subtraction shall 
not be less than zero; 
"(E) add the amounts determined under subparagraph (D) for 
each income category of dependent students; and 
"(F) multiply the number of eligible independent students in 
each income category by the lesser of— 
r 
"(i) 25 percent of the average cost of attendance for all 
undergraduate students determined under subparagraph 
(C); or 
i. 
"(ii) the average cost of attendance for all undergraduate 
students minus the expected family contribution deter-
mined under subparagraph (B) for that income category, 
except that the amount computed by such subtraction for 
any income category shall not be less than zero; 
"(G) add the amounts determined under subparagraph (F) for 
each income category of independent students; and 
"(H) add the amounts determined under subparagraphs (E) 
and (G). 
"(3) To determine the self-help need of an institution's eligible 
graduate and professional students, the Secretary, for academic year 
1988-1989 shall use the procedures employed for academic year 
1986-1987, and, for any subsequent academic years, the Secretary 
shall— 
"(A) establish various income categories of graduate and 
professional students; 
"(B) establish an expected family contribution for each 
'i- 
income category of graduate and professional students, deter-
mined on the basis of the average expected family contribution 
(computed in accordance with part F of this title) of a represent-
ative sample within each income category for the second preced-
ing fiscal year; 
"(C) determine the average cost of attendance for all graduate 
and professional students; 
"(D) subtract from the average cost of attendance for all 
graduate and professional students (determined under subpara-
100 STAT. 1432 
PUBLIC LAW 99-498—OCT. 17, 1986 
fc *
?
? graph (O), the expected family contribution (determined under 
subparagraph (B)) for each income category, except that the 
«•' 
amount computed by such subtraction for any income category 
shall not be less than zero; 
bf! 
"(E) multiply the amounts determined under subparagraph 
(D) by the number of eligible students in each category; and 
^ ' 
"(F) add the amounts determined under subparagraph (E) of 
this paragraph for each income category. 
"(4)(A) For purposes of paragraphs (2) and (3), the term 'average 
cost of attendance' means the average of the attendance costs for 
undergraduate students and for graduate and professional students, 
which shall include (i) tuition and fees determined in accordance 
with subparagraph (B), (ii) standard living expenses determined in 
accordance with subparagraph (C), and (iii) books and supplies 
determined in accordance with subparagraph (D). 
"(B) The average undergraduate and graduate and professional 
tuition and fees described in subparagraph (A)(i) shall be computed 
on the basis of information reported by the institution to the 
Secretary, which shall include (i) total revenue received by the 
institution from undergraduate and graduate 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. 
"(C) The standard living expense described in subparagraph (A)(ii) 
is equal to three-fourths in the Pell Grant family size offset for a 
single independent student. 
"(D) The allowance for books and supplies described in subpara-
graph (A)(iii) is equal to $450. 
"(e) REALLOCATION OF EXCESS ALLOCATIONS.—(1) If an institution 
returns to the Secretary any portion of the sums allocated to such 
institution under this section for any fiscal year the Secretary shall 
reallocate such excess in accordance with paragraph (2). Any sums 
reallocated under this subsection may be used in accordance with 
section 445(a)(2). 
"(2) The Secretary shall reallot 25 percent of the amount available 
pursuant to paragraph (1) to eligible institutions for use in initiat-
ing, improving, and expanding programs of community service-
learning conducted in accordance with section 448 of this part. The 
Secretary shall allocate the remainder of the amounts available 
pursuant to paragraph (1) to eligible institutions based upon the 
criteria described in subsection (c). 
"(f) FiuNG DEADUNES.—The Secretary shall, from time to time, 
set dates before which institutions must file applications for alloca-
tions under this part. 
"GRANTS FOR WORK-STUDY PROGRAMS 
42 use 2753. 
"SEC. 443. (a) AGREEMENTS REQUIRED.—The Secretary is au-
thorized to enter into agreements with institutions of higher 
education under which the Secretary will make grants to such 
institutions to assist in the operation of work-study programs £is 
provided in this part. 
"(b) CONTENTS OF AGREEMENTS.—An agreement entered into 
pursuant to this section shall— 
"(1) provide for the operation by the institution of a program 
«•' 
for the part-time employment of its students in work for the 
institution itself or work in the public interest for a Federal, 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1433 
State, or local public agency or private nonprofit organization 
under an arrangement between the institution and such agency 
or organization, and such work— 
"(A) will not result in the displacement of employed 
Contracts. 
workers or impair existing contracts for services; 
"(B) will be governed by such conditions of employment 
as will be appropriate and reasonable in light of such 
factors as type of work performed, geographical region, and 
proficiency of the employee; 
"(C) does not involve the construction, operation, or 
maintenance of so much of any facility as is used or is to be 
used for sectarian instruction or as a place for religious 
worship; and 
"(D) will not pay any wage to students employed under 
this subpart that is less than the current Federal minimum 
wage as mandated by section 6(a) of the Fair Labor Stand-
ards Act of 1938; 
29 use 206. 
"(2) provide that funds granted an institution of higher edu-
cation, pursuant to section 443, may be used only to make 
payments to students participating in work-study programs, 
except that— 
"(A) an institution may use not to exceed 10 percent of 
the funds granted to the institution in any fiscal year to 
carry out the work study program described in section 447 
at the increased Federal share specified in clause (6)(B) of 
this subsection, and 
"(B) an institution may use a portion of the sums granted 
to it to meet administrative expenses in accordance with 
section 489 of this Act, may use a portion of the sums 
granted to it to meet the cost of a job location and develop-
ment program in accordance with section 446 of this part, 
and may transfer funds in accordance with the provisions of 
section 488 of this Act; 
"(3) provide that in the selection of students for employment 
under such work-study program, only students who dem-
onstrate financial need in accordance with part F of this title, 
and who meet the requirements of section 484 will be assisted, 
except that, if the institution's grant under this part is directly 
or indirectly based in part on the financial need demonstrated 
by students attending the institution less than full time, a 
reasonable proportion of the institution's grant shall be made 
available to such students; 
"(4) provide that for a student employed in a work-study 
program under this part, at the time income derived from any 
employment (including non-work-study or both) is in excess of 
the determination of the amount of such student's need by more 
than $200, continued employment shall not be subsidized with 
funds appropriated under this part; 
"(5) provide that the Federal share of the compensation of 
students employed in the work study program in accordance 
with the agreement will not exceed 80 percent for academic 
years 1987-1988 and 1988-1989, 75 percent for academic year 
1989-1990, and 70 percent for academic year 1990-1991 and 
succeeding academic years, except that— 
"(A) the Federal share may exceed such amounts of such 
compensation if the Secretary determines, pursuant to 
regulations promulgated by the Secretary establishing 
100 STAT. 1434 
PUBLIC LAW 99-498—OCT. 17, 1986 
objective criteria for such determinations, that a Federal 
share in excess of such amounts is required in furtherance 
of the purpose of this part; and 
"(B) the Federal share of the compensation of the stu-
dents employed in the work study for community service-
learning programs described in section 447 from funds 
available under clause (2)(A) in accordance with the agree-
r,, , 
ment will not exceed 90 percent of such compensation; 
"(6) include provisions to make employment under such work-
study program reasonably available (to the extent of available 
funds) to all eligible students in the institution in need thereof, 
and to make equivalent employment offered or arranged by the 
institution reasonably available (to the extent of available 
funds) to all students in the institution who desire such 
employment; 
"(7) provide assurances that employment made available from 
i 
funds under this part will, to the maximum extent practicable, 
complement and reinforce the educational program or voca-
tional goals of each student receiving assistance under this part; 
"(8) provide assurances, in the case of each proprietary 
institution, that students attending the proprietary institution 
receiving gissistance under this part who are employed by the 
institution may be employed in jobs— 
"(A) on campus only; 
"(B) that, to the maximum extent practicable, com-
plement and reinforce the educational programs or voca-
tional goals of such students; and 
"(C) furnishing student services, as determined by the 
Secretary pursuant to regulations, except that no student 
shall be employed in any position that would involve the 
solicitation of other potential students to enroll in the 
school; and 
"(9) include such other reasonable provisions as the Secretary 
shall deem necessary or appropriate to carry out the purpose of 
this part. 
"(c) PRIVATE SECTOR EMPLOYMENT AGREEMENT.—In addition to the 
agreement described in subsection (b), an institution of higher edu-
cation may, at its option, enter into an additional agreement with 
the Secretary which shall— 
"(1) provide for the operation by the institution of a program 
of part-time employment of its students in work for a private 
for-profit organization under an arrangement between the 
institution and such organization that complies with the 
requirements of subparagraphs (A) through (D) of subsection 
(b)(1); 
"(2) provide that the institution will use not more than 25 
percent of the funds made available to such institution under 
this part for any fiscal year for the operation of the program 
1- 
described in paragraph (1); 
"(3) provide that, notwithstanding subsection (b)(5), the Fed-
eral share of the compensation of students employed in such 
program will not exceed 60 percent for academic years 1987-
'[ 
1988 and 1988-1989, 55 percent for academic year 1989-1990, 
and 50 percent for academic year 1990-1991 and succeeding 
academic years, and that the non-Federal share of such com-
pensation will be provided by the private for-profit organization 
in which the student is employed; 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1435 
"(4) provide that jobs under the work study program will be 
academically relevant; and 
"(5) provide that the for-profit organization will not use funds 
made available under this part to pay any employee who would 
otherwise be employed by the organization. 
SOURCES OF MATCHING FUNDS 
"SEC. 444. Nothing in this part shall be construed as restricting 
20 USC 2754. 
the source (other than this part) from which the institution may pay 
its share of the compensation of a student employed under a work-
study program covered by an agreement under this part, and such 
share may be paid to such student in the form of services and 
equipment (including tuition, room, board, and books) furnished by 
such institution. 
"FLEXIBLE USE OF FUNDS 
"SEC. 445. (a) CARRY-OVER AUTHORITY.—(1) Of the sums granted to 
an eligible institution under this part fot any fiscal year, 10 percent 
may, at the discretion of the institution, remain available for 
expenditure during the succeeding fiscal year to carry out programs 
under this part. 
"(2) Any of the sums so granted to an institution for a fiscal year 
which are not needed by that institution to operate work-study 
programs during that fiscal year, and which it does not wish to use 
during the next fiscal year as authorized in the preceding sentence, 
shall remain available to the Secretary for making grants under 
section 443 to other institutions in the same State until the close of 
the second fiscal year next succeeding the fiscal year for which such 
funds were appropriated. 
"(b) CARRY-BACK AUTHORITY.—Up to 10 percent of the sums the 
Grants. 
Secretary determines an eligible institution may receive from funds 
which have been appropriated for a fiscal year may be used by the 
Secretary to make grants under this part to such institution for 
expenditure during the fiscal year preceding the fiscal year for 
which the sums were appropriated. 
42 USC 2755. 
Grants. 
State and local 
governments. 
JOB LOCATION AND DEVELOPMENT PROGRAMS 
"SEC. 446. (a) AGREEMENTS REQUIRED.—(1) The Secretary is 
au-
thorized to enter into agreements with eligible institutions under 
which— 
"(A) such institution may use not more than 10 percent or 
$30,000 of its allotment under section 442, whichever is less, to 
I 
establish or expand a program under which such institution, 
separately or in combination with other eligible institutions, 
locates and develops jobs for currently enrolled students; and 
"(B) such institution may use not more than 10 percent or 
$20,000 of its allotment under section 442, whichever is less, to 
establish or expand a program under which such institution, 
separately or in combination with other eligible institutions and 
through formal or informal consultation with local nonprofit, 
governmental, educational, and community-based organiza-
tions, locates and develops community services jobs for students 
eligible under this part. 
"(2) Jobs located and developed under subparagraph (A) or (B) of 
paragraph (1) shall be jobs which are suitable to the scheduling and 
42 USC 2756. 
100 STAT. 1436 
PUBLIC LAW 99-498—OCT. 17, 1986 
other needs of such students and which, to the maximum extent 
practicable, complement and reinforce the educational programs or 
vocational goals of such students. 
"(b) CONTENTS OF AGREEMENTS.—Agreements under subsection (a) 
shall-
"(1) provide that the Federal share of the cost of any program 
under this section will not exceed 80 percent of such cost; 
"(2) provide satisfactory assurance that funds available under 
. ? > ; ' ] 02 
•
? :: this section will not be used to locate or develop jobs at an 
eligible institution unless such jobs directly relate to the objec-
tives described in subsection (a)(1)(B) of this section; 
"(3) provide satisfactory assurance that the institution will 
continue to spend in its own job location and development 
programs, from sources other than funds received under this 
section, not less than the average expenditures per year made 
during the most recent 3 fiscal years preceding the effective 
date of the agreement; 
. *', 
i 
' i 
"(4) provide satisfactory assurance that funds available under 
this section will not be used for the location or development of 
jobs for students to obtain upon graduation, but rather for the 
: 
location and development of jobs available to students during 
and between periods of attendance at such institution; 
Contracts. 
"(5) provide satisfactory assurance that the location or devel-
opment of jobs pursuant to programs assisted under this section 
will not result in the displacement of employed workers or 
impair existing contracts for services; 
"(6) provide satisfactory assurance that Federal funds used for 
the purpose of this section can realistically be expected to help 
n ji generate student wages exceeding, in the aggregate, the amount 
of such funds, and that if such funds are used to contract with 
-T> 
another organization, appropriate performance standards are 
part of such contract; and 
Reports. 
"(7) provide that the institution will submit to the Secretary 
. ? an annual report on the uses made of funds provided under this 
. 
section and an evaluation of the effectiveness of such program 
in benefiting the students of such institution. 
"(c) DEFINITION OF COMMUNITY SERVICE.—For the purpose of this 
section, the term 'community services' means services which are 
identified by an institution of higher education, through formal or 
?.;"' )t: ' :
> 
informal consultation with local nonprofit, governmental, and 
community-based organizations, as designed to improve the quality 
of life for community residents, particularly low-income individuals, 
or to solve particular problems related to their needs including, but 
not limited to, such fields as health care, child care, literacy 
training, education (including tutorial services), housing and 
neighborhood improvement, rural development, and community 
improvement. 
WORK STUDY FOR COMMUNITY SERVICE-LEARNING ON BEHALF OF LOW-
INCOME INDIVIDUALS AND FAMIUES 
42 use 2756a. 
"SEC. 447. (a) PURPOSE.—The purpose of this section is to encour-
age and enable institutions of higher education to develop work 
study programs involving eligible students in community service-
learning designed to develop, improve, or expand services for low-
income individuals and families or to solve particular problems 
related to the needs of low-income individuals. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1437 
"(b) DEFINITIONS.—For the purpose of this section— 
"(1) 'community service-learning program' means a program 
of student work that— 
"(A) provides tangible community services for or on 
behalf of low-income individuals or families; and 
"(B) to the maximum extent practicable, provides partici-
; , , 
pating students with work-learning opportunities which 
complement and reinforce their educational programs or 
,^ .; 
vocational goals; and 
"(2) 'community services' means services which are identified 
by an institution of higher education, through formal or infor-
mal consultation with local nonprofit, governmental, and 
community-based organizations, as designed to improve the 
quality of life for community residents, particularly low-income 
individuals, or to solve particular problems related to their 
needs including, but not limited to, such fields as health care, 
child care, literacy training, education (including tutorial serv-
ices), welfare, social services, transportation, housing and 
neighborhood improvement, public safety, crime prevention and 
control, 
recreation, 
rural 
development, 
and community 
improvement. 
"(c) USE OF OTHER FUNDS TO CONDUCT PROGRAM.—Each institu-
tion participating under this part may use funds made available 
under the last sentence of section 489(a) to conduct that institution's 
program of community service-learning, including— 
"(1) development of mechanisms to assure the academic qual-
ity of the student experience, 
"(2) assuring student access to educational resources, exper-
tise, and supervision necessary to achieve community service 
objectives, and 
"(3) collaboration with public and private nonprofit agencies 
in the planning, development, and administration of such 
programs.", 
(b) EFFECTIVE DATE.—Sections 443(c), 446, and 447 of the Act as 
amended by this section shall apply to periods of enrollment begin-
ning on or after July 1,1987. 
SEC. 404, DEMONSTRATION PROJECT AUTHORIZED. 
The Act is amended by adding after part C the following: 
"PART D—INCOME CONTINGENT DIRECT LOAN DEMONSTRATION 
PROJECT 
42 use 2753 
note. 
STATEMENT OF PURPOSE 
"SEC. 451. It is the purpose of this part to examine the feasibility 
of a direct loan program which uses the income contingent repay-
ment method in order to increase the economic and full use of direct 
student loan funds. 
20 use 1087a. 
DEMONSTRATION PROJECT AUTHORIZED 
"SEC. 452. (a) GENERAL AUTHORITY.—The Secretary shall, from the 
20 use I087b. 
amounts appropriated each fiscal year, carry out demonstration 
projects in accordance with the provisions of this part. 
"(b) AUTHORIZATION OF APPROPRIATIONS.—For the purpose of 
making contributions to student loan funds established pursuant to 
this part, there are authorized to be appropriated $5,000,000 for 
100 STAT. 1438 
PUBLIC LAW 99-498—OCT. 17, 1986 
fiscal year 1987 and such sums as may be necessary for each of the 4 
succeeding fiscal years. 
"(c) ALLOTMENT; MAXIMUM NUMBER OF GRANTS.—(1) The Sec-
retary shall allot the amounts appropriated in each fiscal year 
pursuant to subsection (b) among institutions of higher education 
which desire to participate in the pilot project authorized by this 
part and which have agreements with the Secretary under section 
453. 
"(2) The Secretary may not enter into agreements with more than 
10 institutions of higher education under this part. 
' 
"AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION 
20 use 1087c. 
"SEC. 453. An agreement with an institution of higher education 
under this part shall— 
"(1) provide for the establishment and maintenance of a 
student loan fund for the purpose of this part; 
"(2) provide for the deposit in such fund of Federal capital 
contributions from funds appropriated pursuant to section 
452(b); 
"(3) provide for the deposit in such fund of a capital contribu-
tion by such institution equal to not less than one-ninth of the 
amount of the Federal capital contribution described in para-
graph (2); 
"(4) provide for the deposit in such fund of collections of 
principal and interest on student loans made from deposited 
funds and any other earnings of such funds; 
"(5) provide that such student loan fund shall be used only 
for— 
"(A) loans to students, in accordance with the provisions 
of this part; 
"(B) administrative expenses; and 
"(C) costs of litigation, and other collection costs agreed to 
by the Secretary in connection with the collection of a loan 
from the fund (and interest thereon) or a charge assessed 
pursuant to regulations; 
"(6) provide that repayment of the loans made from such 
student loan funds will be made in accordance with a repay-
ment schedule, which will be adjusted annually on the basis of 
the total amount borrowed by the student and the income of the 
student borrower, together with such adjustments in the sched-
ule as the Secretary and the institution determine will best 
carry out the purpose of this part, except that for the first 2 
years of the repayment period the schedule may require a fixed 
0; V 
payment plan; 
"(7) provide for the distribution of assets from student loan 
funds under this part in accordance with criteria prescribed by 
the Secretary, based upon the provisions of section 466; and 
"(8) provide for such other assurances and limitations as the 
Secretary may reasonably require. 
i * 
"TERMS OF LOAN UNDER THE PILOT PROGRAM 
20 use I087d. 
"SEC. 454. (a) CONDITIONS, LIMITATIONS, AND REQUIREMENTS.—(1) 
Loans from any student loan fund established pursuant to an agree-
ment under section 453, to any student by any institution shall, 
subject to such conditions, limitations, and requirements as the 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1439 
Secretary shall prescribe by regulation, be made on such terms and 
conditions as the institution may determine. 
"(2) The aggregate amount of all loans made by institutions of 
higher education from loan funds established pursuant to agree-
ments under this part to any student may not exceed $17,500. 
"(3) The total amount of loans made by institutions of higher 
education from loan funds established pursuant to such agreement 
for any academic year may not exceed— 
"(A) $2,500 in the case of a student who is in the first or 
second academic year of a program of education leading to a 
bachelor's degree; 
"(B) $3,500 in the case of a student who is in the third such 
year; and 
"(C) $4,500 in the case of a student who is in the fourth and 
fifth such year. 
"(4) The interest rate on all such loans shall be the rate equal to 
the rate obtained for each calendar year (A) by computing the 
average of the bond equivalent rates of 91-day Treasury bills auc-
tioned for such 3-month period preceding such year, and (B) by 
adding 3 percent to the resulting percent. 
"(5) Loans made from loan funds established pursuant to such 
agreements shall contain such agreements for deferments, interest 
accrual during deferments, and loan cancellation, as are consistent 
with the provisions of part E of this title, subject to such modifica-
tions as the Secretary may, by regulation, prescribe. 
"(b) AUTHORITY OF SECRETARY TO PRESCRIBE OTHER TERMS.—The 
Secretary may by regulation prescribe such other terms for loans 
made from loan funds established pursuant to such agreements as 
the Secretary determines will contribute to carrying out the provi-
sions of this part. 
"FEASIBIUTY STUDY 
"SEC. 455. (a) STUDY.—The Secretary shall, based upon the 
projects assisted under this part, conduct a study of the feasibility of 
extending the pilot project to a direct student loan fund program of 
general applicability beginning after September 30,1990. 
"(b) REPORT.—The Secretary shall prepare and submit to the 
Congress a report on the feasibility study begun pursuant to subsec-
tion (a) not later than October 1, 1991, and October 1, 1995, together 
with such recommendations as the Secretary deems appropriate.". 
SEC. 405. AMENDMENT TO PART E OF THE ACT. 
(a) AMENDMENT.—Part E of title IV of the Act is amended to read 
as follows: 
"PART E—DIRECT LOANS TO STUDENTS IN INSTITUTIONS OF HIGHER 
EDUCATION 
20 u s e 1087e. 
APPROPRIATIONS AUTHORIZED 
"SEC. 461. (a) PROGRAM AUTHORITY.—The Secretary shall carry 
out a program of stimulating and assisting in the establishment and 
maintenance of funds at institutions of higher education for the 
making of low-interest loans to students in need thereof to pursue 
their courses of study in such institutions. Loans made under this 
part shall be known as 'Perkins Loans'. 
20 u s e 1087aa. 
100 STAT. 1440 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(b) AUTHORIZATION OF APPROPRIATIONS.—(1) For the purpose of 
enabling the Secretary to make contributions to student loan funds 
established under this part, there are authorized to be appropriated 
$268,000,000 for fiscal year 1987 and such sums as may be necessary 
for each of the 4 succeeding fiscal years. 
"(2) In addition there are hereby authorized to be appropriated 
such sums for fiscal year 1991 and each of the five succeeding fiscal 
years as may be necessary to enable students who have received 
loans for academic years ending prior to October 1,1991, to continue 
or complete courses of study. 
"(c) USE OF APPROPRIATIONS.—Any sums appropriated pursuant to 
subsection O
t
>
) for any fiscal year shall be available for apportion-
ment pursuant to section 462 and for pa3mients of Federal capital 
contributions therefrom to institutions of higher education which 
have agreements with the Secretary under section 463. Such Federal 
capital contributions and all contributions from such institutions 
shall be used for the establishment, expansion, and maintenance of 
student loan funds. 
"ALLOCATION OF FUNDS 
j.. 
-. 
, ,. 
20 use I087bb. 
"SEC. 462. (a) ALLOCATION BASED ON PREVIOUS ALLOCATION.—(1) 
From the amount appropriated pursuant to section 461(b) for each 
fiscal year, the Secretary shall first allocate to each eligible institu-
tion an amount equal to— 
"(A) 100 percent of the amount such institution expended 
under this part for fiscal year 1985, multiplied by 
"(B) the institution's default penedty, as determined under 
subsection (f), 
except that if the institution which has a default rate in excess of 
the applicable maximum default rate under subsection (g), the 
institution may not receive an allocation under this paragraph. 
"(2XA) From the amount so appropriated, the Secretary shall next 
allocate to each eligible institution that began participation in the 
• 
if y 
program under this part after fiscal year 1985 but is not a first or 
second time participant, an amount equal to the greater of— 
"(i) $5,000; or 
"(ii) 100 percent of the amount received and expended under 
this part for the first year it participated in the program. 
"(B) From the amount so appropriated, the Secretary shall next 
allocate to each eligible institution that began participation in the 
program under this part after fiscal year 1985 and is a first or 
second time participant, an amount equal to the greatest o
f
— 
"(i) $5,000; 
"(ii) an amount equal to (I) 90 percent of the amount received 
and used under this part in the second preceding fiscal year by 
eligible institutions offering comparable programs of instruc-
tion, divided by (II) the number of students enrolled at such 
comparable institutions in such fiscal year, multiplied by (III) 
the number of students enrolled at the applicant institution in 
such fiscal year; or 
"(iii) 90 percent of the institution's allocation under this part 
; 
j^ 
for the preceding fiscal year. 
"(C) Notwithstanding subparagraphs (A) and (B) of this para-
graph, the Secretary shall allocate to each eligible institution 
which— 
"(i) was a first-time participant in the program in fiscal year 
1986 or any subsequent fiscal year, and 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1441 
"(ii) received a larger amount under this subsection in the 
second year of participation, 
an amount equal to 90 percent of the amount it received under this 
subsection in its second year of participation. 
"(D) For any fiscal year after a fiscal year in which an institution 
receives an allocation under subparagraph (A), (B), or (C), the Sec-
retary shall allocate to such institution an amount equal to the 
product of— 
"(i) the amount determined under subparagraph (A), (B), or 
(C), multiplied by 
"(ii) the institution's default penalty, as determined under 
subsection (f), 
except that if the institution which has a default rate in excess of 
the applicable maximum default rate under subsection (g), the 
institution may not receive an allocation under this paragraph. 
"(3XA) If the amount appropriated for any fiscal year is less than 
the amount required to be allocated to all institutions under para-
graph (1) of this subsection, then the amount of the allocation to 
each such institution shall be ratably reduced. 
"(B) If the amount appropriated for any fiscal year is more than 
the amount required to be allocated to all institutions under para-
graph (1) but less than the amount required to be allocated to all 
institutions under paragraph (2), then— 
"(i) the Secretary shall allot the amount required to be allo-
cated to all institutions under paragraph (1), and 
"(ii) the amount of the allocation to each institution under 
paragraph (2) shall be ratably reduced. 
"(C) If additional amounts are appropriated for any such fiscal 
year, such reduced amounts shall be increased on the same basis as 
they were reduced (until the amount allocated equals the amount 
required to be allocated under paragraphs (1) and (2) of this 
subsection). 
"(b) ALLOCATION OF EXCESS BASED ON PRO RATA SHARE.—From 
one-quarter of the remainder of the simount appropriated pursuant 
to section 461(b) for any fiscal year (after making the allocations 
required by subsection (a) of this section), the Secretary shall allo-
cate to each eligible institution an amount which bears the same 
ratio to such one-quarter as— 
"(1) the amount the eligible institution receives for such fiscal 
year under subsection (a), bears to 
"(2) the amount all such institutions receive under such 
subsection (a). 
"(c) ALLOCATION OF EXCESS BASED ON SHARE OF EXCESS EUGIBLE 
AMOUNTS.—(1) From three-quarters of the remainder of the amount 
appropriated pursuant to section 461(b) after making the allocations 
required by subsection (a) of this section, the Secretary shall allocate 
to each eligible institution which has an excess eligible amount an 
amount which bears the same ratio to such remainder as such 
excess eligible amount bears to the sum of the excess eligible 
amounts of all such eligible institutions (having such excess eligible 
amounts). 
"(2) For any eligible institution, the excess eligible amount is the 
amount, if any, by which— 
"(AXi) that institution's eligible amount (as determined under 
paragraph (3)), divided by (ii) the sum of the eligible amounts of 
all institutions (as so determined), multiplied by (iii) the amount 
100 STAT. 1442 
PUBLIC LAW 99-498—OCT. 17, 1986 
appropriated pursuant to section 461(b) for the fiscal year; 
exceeds 
"(B) the amount required to be allocated to that institution 
under subsection (a), 
except that an eligible institution which has a default rate in excess 
of the applicable maximum default rate under subsection (g) may 
not receive an allocation under this paragraph. 
"(3) For any eligible institution, the eligible amount of that 
institution is equal to— 
"(A) the amount of the institution's self-help need, as deter-
mined under subsection (d); minus 
"(B) the institution's anticipated collections; multiplied by 
"(C) the institution's default penalty, as determined under 
subsection (f); 
except that, if the institution has a default rate in excess of the 
applicable maximum default rate under subsection (g), the eligible 
amount of that institution is zero. 
"(d) DETERMINATION OF INSTITUTION'S SELF-HELP NEED.—(1) 
The 
amount of an institution's self-help need is equal to the sum of the 
self-help need of the institution's eligible undergraduate students 
and the self-help need of the institution's eligible graduate and 
professional students. 
"(2) To determine the self-help need of an institution's eligible 
undergraduate students, the Secretary shall— 
"(A) establish various income categories for dependent and 
independent undergraduate students; 
"(B) establish an expected family contribution for each 
income category of dependent and independent undergraduate 
students, determined on the basis of the average expected 
family contribution (computed in accordance with part F of this 
title) of a representative sample within each income category 
for the second preceding fiscal year; 
"(C) compute 25 percent of the average cost of attendance for 
all undergraduate students; 
"(D) multiply the number of eligible dependent students in 
each income category by the lesser of— 
"(i) 25 percent of the average cost of attendance for all 
undergraduate students determined under subparagraph 
;»&? 
(C); or 
"(ii) the average cost of attendance for all undergraduate 
•;; 
students minus the expected family contribution deter-
mined under subparagraph (B) for that income category, 
T 
except that the amount computed by such subtraction shall 
not be less than zero; 
"(E) add the amounts determined under subparagraph (D) for 
each income category of dependent students; 
"(F) multiply the number of eligible independent students in 
each income category by the lesser of— 
"(i) 25 percent of the average cost of attendance for all 
undergraduate students determined under subparagraph 
(C); or 
tj^ii 
"(ii) the average cost of attendance for all undergraduate 
students minus the expected family contribution deter-
mined under subparagraph (B) for that income category, 
except that the amount computed by such subtraction for 
any income category shall not be less than zero; 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1443 
"(G) add the amounts determined under subparagraph (F) for 
each income category of independent students; and 
"(H) add the amounts determined under subparagraphs (E) 
and (G). 
"(3) To determine the self-help need of an institution's eligible 
graduate and professional students, the Secretary, for academic year 
1988-1989, shall use the procedures employed for academic year 
1986-1987, and, for any subsequent academic years, the Secretary 
shall— 
"(A) establish various income categories for graduate and 
professional students; 
"(B) establish an expected family contribution for each 
income category of graduate and professional students, deter-
mined on the basis of the average expected family contribution 
(computed in accordance with part F of this title) of a represent-
ative sample within each income category for the second preced-
ing fiscal year; 
"(C) determine the average cost of attendance for all graduate 
and professional students; 
"(D) subtract from the average cost of attendance for all 
graduate and professional students (determined under subpara-
graph (O), the expected family contribution (determined under 
subparagraph (B)) for each income category, except that the 
amount computed by such subtraction for any income category 
shall not be less than zero; 
"(E) multiply the amounts determined under subparagraph 
(D) by the number of eligible students in each category; 
"(F) add the amounts determined under subparagraph (E) for 
each income category. 
"(3)(A) For purposes of paragraphs (2) and (3), the term 'average 
cost of attendance' means the average of the attendance costs for 
undergraduate students and for graduate and professional students, 
which shall include (i) tuition and fees determined in accordance 
with subparagraph (B), (ii) standard living expenses determined in 
accordance with subparagraph (C), and (iii) books and supplies 
determined in accordance with subparagraph (D). 
"(B) The average undergraduate and graduate and professional 
tuition and fees described in subparagraph (A)(i) shall be computed 
on the basis of information reported by the institution to the 
Secretary, which shall include (i) total revenue received by the 
institution from undergraduate and graduate 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. 
"(C) The standard living expense described in subparagraph (A)(ii) 
is equal to three-fourths in the Pell Grant family size offset for a 
single independent student. 
"(D) The allowance for books and supplies described in subpara-
graph (AXiii) is equal to $450. 
"(e) ANTICIPATED COLLECTIONS; CASH ON HAND.—An institution's 
anticipated collections are equal to the amount which was collected 
during the second year preceding the beginning of the award period, 
multiplied by 1.21. 
"(0 DEFAULT PENALTY.—For any institution which has a default 
rate which equals or exceeds 7.5 percent but does not exceed the 
maximum default rate applicable to the award year under para-
graph (2), the institution's default penalty is a percentage equal to 
100 STAT. 1444 
PUBLIC LAW 99-498—OCT. 17,1986 
the complement of such default rate. For any institution which has 
a default rate that does not exceed 7.5 percent, the institution's 
default penalty is equal to one. 
"(g) APPUCABLE MAXIMUM DEFAULT RATE.—(1) For award years 
1988, 1989, and 1990, the applicable maximum default rate is 20 
percent. 
"(2) For award year 1991 and subsequent years, the applicable 
maximum default rate is 15 percent. 
"(h) DEFINITION OF DEFAULT RATE.—(1) For the purpose of this 
section, the default rate is computed by dividing— 
"(A) the total principal amount of defaulted loans; by 
"(B) the total principal amount of loans made under this part, 
less the principal amount of all loans made to borrowers who 
are eligible for deferment under section 464(c)(2XA)(i) or are in a 
grace period preceding repayment. 
"(2) For the purpose of paragraph (1)(A), the total principal 
amount of defaulted loans is equal to the total amount borrowed 
under loans that have reached repayment status and that are in 
default, minus— 
"(A) amounts that have been repaid or cancelled on such 
loans; 
"(B) loans discharged in bankruptcy; 
"(C) loans referred or assigned to the Secretary for collection 
under paragraph (5)(A), (SXBXi), or (6) of section 463(a); and 
"(D) loans that are in default but on which the borrowers 
have made satisfactory arrangements to resume payment. 
"(3) A loan shall be considered to be in default— 
"(A) 120 days (in the case of a loan repayable monthly), or 
"(B) 180 days (in the case of a loan repayable quarterly), 
after the borrower fails to make an installment payment when due 
or to comply with other terms of the promissory note. 
"(i) FiuNG DEADLINES.—The Secretary shall, from time to time, 
set dates before which institutions must file applications for alloca-
tions under this part. 
"(j) REALLOCATION OF EXCESS ALLOCATIONS.—If an institution re-
turns to the Secretary any portion of the sums allocated to such 
institution under this section for any fiscal year the Secretary shall, 
in accordance with regulations, reallocate such excess to other 
institutions. 
"AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION 
20 use 1
0
8
7
C
C
. 
"SEC. 463. (a) CONTENTS OF AGREEMENTS.—An agreement with any 
institution of higher education for the payment of Federal capital 
contributions under this part shall— 
"(1) provide for the establishment and maintenance of a 
student loan fund for the purpose of this part; 
"(2) provide for the deposit in such fund of— 
"(A) Federal capital contributions from funds appro-
priated under section 461; 
7iOk 
"(B) a capital contribution by such institution in an 
amount equal to not less than one-ninth of the amount of 
the Federal capital contributions described in subpara-
graph (A); 
"(C) collections of principal and interest on student loans 
, 
. • made from deposited funds; 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1445 
"(D) charges collected pursuant to regulations under sec-
tion 464(c)(lXH); and 
"(E) any other earnings of the funds; 
"(3) provide that such student loan fund shall be used only 
for— 
"(A) loans to students, in accordance with the provisions 
of this part; 
I 
"(B) administrative expenses, as provided in subsection 
(b); 
: *ry 
"(C) capital distributions, as provided in section 466; and 
"(D) costs of litigation, and other collection costs agreed 
i^j; 
to by the Secretary in connection with the collection of a 
loan from the fund (and interest thereon) or a charge 
assessed pursuant to regulations under section 464(c)(lXH); 
"(4) provide that where a note or written agreement evidenc- Reporcs. 
ing a note has been in default for (A) 120 days, in the case of a 
loan which is repayable in monthly installments, or (B) 180 
f 
days, in the case of a loan which is repayable in less frequent 
installments, notice of such default shall be given to the Sec-
retary in a report describing the total number of loans from 
J 
such fund which are in such default, and made to the Secretary 
at least semiannually; 
"(5) provide that where a note or written agreement evidenc-
ing a loan has been in default despite due diligence on the part 
of the institution in attempting collection thereon— 
"(A) if the institution has knowingly failed to maintain 
c, 
an acceptable collection record with respect to such loan, as 
g 
determined by the Secretary in accordance with criteria 
established by regulation, the Secretary may— 
"(i) require the institution to assign such note or 
(P f
; 
agreement to the Secretary, without recompense; and 
/ 
"(ii) apportion any sums collected on such a loan, less 
I 
an amount not to exceed 30 percent of any sums col-
lected to cover the Secretary's collection costs, among 
other institutions in accordance with section 462; or 
, ji;» 
"(B) if the institution is not one described in subpara-
graph (A), the Secretary may— 
"(i) allow such institution to transfer its interest in 
fr^jiis: 
such loan to the Secretary, for collection, and the Sec-
retary may use any collections thereon (less an amount 
j0 ijr.; 
not to exceed 30 percent of any such sums collected to 
cover the Secretary's collection costs) to make alloca-
tions to institutions of additional capital contributions 
^
; 
in accordance with section 462; or 
y 
"(ii) allow such institution to refer such note or 
£ 
agreement to the Secretary, without recompense, 
except that any sums collected on such a loan (less an 
rr; ;^. 
amount not to exceed 30 percent of any such sums 
collected to cover the Secretary's collection costs) shall 
0.-' 
be repaid to such institution no later than 180 days 
after collection by the Secretary and treated as an 
additional capital contribution; 
"(6) provide that, if an institution of higher education deter-
mines not to service and collect student loans made available 
from funds under this part, the institution will assign, at the 
-- 
beginning of the repayment period, notes or evidence of obliga- 
''• -; ? i 
m tions of student loans made from such funds to the Secretary 
100 STAT. 1446 
PUBLIC LAW 99-498—OCT. 17, 1986 
s and the Secretary shall apportion any sums collected 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) among other institutions in accordance with section 462; 
"(7) provide that, notwithstanding any other provision of law, 
:i^ the Secretary will provide to the institution any information 
with respect to the names and addresses of borrowers or other 
r
* relevant information which is available to the Secretary, from 
whatever source such information may be derived; 
feii 
"(8) provide assurances that the institution will comply with 
the provisions of section 463A; 
"(9) provide that the institution of higher education will make 
loans first to students with exceptional need; and 
"(10) include such other reasonable provisions as may be 
necessary to protect the United States from unreasonable risk 
of loss and as are agreed to by the Secretary and the institution. 
"(b) ADMINISTRATIVE EXPENSES.—An institution which has entered 
into an agreement under subsection (a) shall be entitled, for each 
fiscal year during which it makes student loans from a student loan 
fund established under such agreement, to a payment in lieu of 
reimbursement for its expenses in administering its student loan 
program under this part during such year. Such payment shall be 
made in accordance with section 485. 
"(c) COOPERATIVE AGREEMENTS WITH CREDIT BUREAU ORGANIZA-
TIONS.—(1) For the purpose of promoting responsible repayment of 
loans made pursuant to this part, the Secretary shall enter into 
cooperative agreements with credit bureau organizations to provide 
for the exchange of information concerning student borrowers 
concerning whom the Secretary has received a referral pursuant to 
section 467. 
"(2) Each cooperative agreement made pursuant to paragraph (1) 
shall be made in accordance with the requirements of section 430A 
except that such agreement shall provide for the disclosure by the 
Secretary to such organizations, with respect to any loan for which 
the Secretary is responsible, of— 
"(A) the date of disbursement and the amount of any such 
loan; 
"(B) information concerning collection of any such loan, 
including information concerning the status of any defaulted 
loan; and 
"(C) the date of cancellation of the note upon completion of 
repayment by the borrower of any such loan. 
"(3) Notwithstanding paragraphs (4) and (6) of subsection (a) of 
section 605 of the Fair Credit Reporting Act (15 U.S.C. 1681c (a)(4), 
(a)(6)), a consumer reporting agency may make a report containing 
information received from the Secretary regarding the status of a 
borrower's account on a loan made under this part until— 
"(A) 7 years from the date on which the Secretary accepted an 
assignment or referral of a loan, or 
"(B) 7 years from the date the Secretary first reports the 
t account to a consumer reporting agency, if that account has not 
been previously reported by any other holder of the note. 
STUDENT LOAN INFORMATION BY ELIGIBLE INSTITUTIONS 
20USC1087CC-1. 
"SEC. 463A. (a) DISCLOSURE REQUIRED PRIOR TO DISBURSEMENT.— 
Each institution of higher education, in order to carry out the 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1447 
provisions of section 463(aX8), shall, at or prior to the time such 
institution makes a loan to a student borrower which is made under 
this part, provide thorough and adequate loan information on such 
loan to the student borrower. Any disclosure required by this subsec-
tion may be made by an institution of higher education as part of 
the written application material provided to the borrower, or as part 
of the promissory note evidencing the loan, or on a separate written 
form provided to the borrower. The disclosures shall include— 
"(1) the name of the institution of higher education, and the 
address to which communications and payments should be sent; 
"(2) the principal amount of the loan; 
"(3) the amount of any charges collected by the institution at 
or prior to the disbursal of the loan and whether such charges 
are deducted from the proceeds of the loan or paid separately by 
the borrower; 
"(4) the stated interest rate on the loan; 
h 
"(5) the yearly and cumulative maximum amounts that may 
be borrowed; 
"(6) an explanation of when repa3mient of the loan will be 
required and when the borrower will be obligated to pay in-
terest that accrues on the loan; 
"(7) a statement as to the minimum and maximum repayment 
term which the institution may impose, and the minimum 
monthly payment required by law and a description of any 
0 
penalty imposed as a consequence of default, such as liability 
for expenses reasonably incurred in attempts by the Secretary 
or institutions to collect on a loan; 
"(8) a statement of the total cumulative balance owed by the 
student to that institution, the projected level of indebtedness of 
the student based on a 2- or 4-year college career, and an 
estimate of the projected monthly repayment given the level of 
indebtedness over a 2-, 4-, or 5-year college career; 
"(9) an explanation of any special options the borrower may 
have for loan consolidation or other refinancing of the loan; 
"(10) a statement that the borrower has the right to prepay 
all or part of the loan, at any time, without penalty, a statement 
summarizing circumstances in which repayment of the loan or 
interest that accrues on the loan may be deferred, and a brief 
notice of the program for repajonent of loans, on the basis of 
military service, pursuant to section 902 of the Department of 
Defense Authorization Act, 1981 (10 U.S.C. 2141, note); 
J* 
"(11) a definition of default and the consequences to the 
borrower if the borrower defaults, including a statement that 
the default may be reported to a credit bureau or credit report-
ing agency; 
"(12) to the extent practicable, the effect of accepting the loan 
on the eligibility of the borrower for other forms of student 
assistance; and 
"(13) an explanation of any cost the borrower may incur in 
the making or collection of the loan. 
"(b) DISCLOSURE REQUIRED PRIOR TO REPAYMENT.—Each institu-
tion of higher education shall enter into an agreement with the 
Secretary under which the institution will, prior to the start of the 
repayment period of the student borrower on loans made under this 
part, disclose to the student borrower the information required 
under this subsection. Any disclosure required by this subsection 
may be made by an institution of higher education either in a 
100 STAT. 1448 
PUBLIC LAW 99-498—OCT. 17, 1986 
promissory note evidencing the loan or loans or in a written state-
ment provided to the borrower. The disclosures shall include— 
"(1) the name of the institution of higher education, and the 
"/ address to which communications and payments should be sent; 
"(2) the scheduled date upon which the repayment period is to 
begin; 
"(3) the estimated balance owed by the borrower on the loan 
' or loans covered by the disclosure as of the scheduled date on 
.: . which the repayment period is to begin (including, if applicable, 
the estimated amount of interest to be capitalized); 
"(4) the stated interest rate on the loan or loans, or the 
combined interest rate of loans with different stated interest 
£ rates; 
"(5) the nature of any fees which may accrue or be charged to 
the borrower during the repayment period; 
"(6) the repayment schedule for all loans covered by the 
:» disclosure including the date the first installment is due, and 
the number, amount, and frequency of required payments; 
"(7) an explanation of any special options the borrower may 
have for loan consolidation or other refinancing of the loan; 
"(8) the projected total of interest charges which the borrower 
will pay on the loan or loans, assuming that the borrower 
makes payments exactly in accordance with the repayment 
schedule; and 
"(9) a statement that the borrower has the right to prepay all 
or part of the loan or loans covered by the disclosure at any 
time without penalty. 
Claims. 
"(c) CosTS A
N
D EFFECTS O
F DISCLOSURES.—Such information shall 
be available without cost to the borrower. The failure of an eligible 
institution to provide information as required by this section shsdl 
not (1) relieve a borrower of the obligation to repay a loan in 
accordance with its terms, (2) provide a basis for a claim for civil 
damages, or (3) be deemed to abrogate the obligation of the Sec-
retary to make payments with respect to such loan. 
"TERMS OF LOANS 
Regulations. 
"SEC. 464. (a) TERMS A
N
D CONDITIONS.—(1) Loans from any student 
20 use I087dd. loan fund established pursuant to an agreement under section 463 to 
any student by any institution shall, subject to such conditions, 
limitations, and requirements as the Secretary shall prescribe by 
regulation, be made on such terms and conditions as the institution 
may determine. 
"(2) The aggregate of the loans for all years made by institutions 
of higher education from loan funds established pursuant to agree-
ments under this part may not exceed— 
"(A) $18,000 in the case of any graduate or professional stu-
dent (as defined by regulations of the Secretary, and including 
any loans from such funds made to such person before he 
became a graduate or professional student); 
"(B) $9,000 in the case of a student who has successfully 
• completed 2 years of a program of education leading to a 
bachelor's degree, but who has not completed the work nec-
essary for such a degree (determined under regulations of the 
i;. 
Secretary, and including any loans from such funds made to 
", 
such person before he became such a student); and 
"(C) $4,500 in the case of any other student. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1449 
"(3) Regulations of the Secretary under paragraph (1) shall be 
designed to prevent the impairment of the capital student loan 
funds to the maximum extent practicable and with a view toward 
the objective of enabling the student to complete his course of study. 
"(b) DEMONSTRATION OF NEED AND ELIGIBILITY REQUIRED.—(1) A 
loan from a student loan fund assisted under this part may be made 
only to a student who demonstrates financial need in accordance 
with part F of this title and who meets the requirements of section 
484. 
"(2) If the institution's Federal capital contribution under section 
462 is directly or indirectly based in part on the financial need 
demonstrated by students attending the institution less than full 
time, a reasonable proportion of the loans under this part shall be 
made available to such students. 
"(c) CONTENTS OF LOAN AGREEMENT.—(1) Any agreement between 
an institution and a student for a loan from a student loan fund 
assisted under this part— 
"(A) shall be evidenced by note or other written instrument 
which, except as provided in paragraph (2), provides for repay-
ment of the principal amount of the loan, together with interest 
thereon, in equal installments (or, if the borrower so requests, in 
graduated periodic installments determined in accordance with 
such schedules as may be approved by the Secretary) payable 
quarterly, bimonthly, or monthly, at the option of the institu-
tion, over a period beginning nine months after the date on 
which the student ceases to carry, at an institution of higher 
education or a comparable institution outside the United States 
approved for this purpose by the Secretary, at least one-half the 
normal full-time academic workload, and ending 10 years and 9 
months after such date except that such period may begin 
earlier than 9 months after such date upon the request of the 
borrower; 
"(B) shall include provision for acceleration of repajmient of 
the whole, or any part, of such loan, at the option of the 
borrower; 
"(C)(i) may provide, at the option of the institution, in accord- 
• -n ;. 
ance with regulations of the Secretary, that during the repay-
ment period of the loan, pa3niients of principal and interest by 
the borrower with respect to all outstanding loans made to the 
student from a student loan fund assisted under this part shall 
be at a rate equal to not less than $30 per month, except that 
the institution may, subject to such regulations, permit a bor-
' 
rower to pay less than $30 per month for a period of not more 
than one year where necessary to avoid hardship to the bor-
rower, but without extending the 10-year maximum repayment 
period provided for in subparagraph (A) of this paragraph; and 
^ 
5 
"(ii) may provide that the total payments by a borrower for a 
* 
monthly or similar pa)niient period with respect to the aggre-
gate of all loans held by the institution may, when the amount 
"' 
of a monthly or other similar payment is not a multiple of $5, be 
rounded to the next highest whole dollar amount that is a 
multiple of $5; 
^ 
"(D) shall provide that the loan shall bear interest, on the 
unpaid balance of the loan, at the rate of (i) 3 percent per year, 
(ii) 4 percent per year in the case of any loan made on or after 
* 
July 1, 1981, or (iii) 5 percent per year in the case of any loan 
i 
made on or after October 1, 1981, except that no interest shall 
100 STAT. 1450 
PUBLIC LAW 99-498—OCT. 17, 1986 
accrue (I) prior to the beginning date of repayment determined 
under subparagraph (A)(i), or (II) during any period in which 
repayment is suspended by reason of paragraph (2); 
"(E) unless the borrower is a minor and the note or other 
evidence of obligation executed by him would not, under ap-
plicable law, create a binding obligation, shall provide that the 
loan shall be made without security and without endorsement; 
"(F) shall provide that the liability to repay the loan shall be 
canceled upon the death of the borrower, or if he becomes 
permanently and totally disabled as determined in accordance 
with regulations of the Secretary; 
"(G) shall provide that no note or evidence of obligation may 
be assigned by the lender, except upon the transfer of the 
borrower to another institution participating under this part 
(or, if not so participating, is eligible to do so and is approved by 
the Secretary for such purpose), to such institution, and except 
as necessary to carry out section 463(a)(6); 
"(H) pursuant to regulations of the Secretary, shall provide 
for an assessment of a charge with respect to the loan for failure 
of the borrower to pay all or part of an installment when due, 
which shall include the expenses reasonably incurred in 
attempting collection of the loan, to the extent permitted by the 
Secretary, except that no charge imposed under this subpara-
graph shall exceed 20 percent of the amount of the monthly 
pavment of the borrower; and 
(I) shall contain a notice of the system of disclosure of 
information concerning default on such loan to credit bureau 
organizations under section 463(c). 
"(2)(A) No repayment of principal of, or interest on, any loan from 
a student loan fund assisted under this part shall be required during 
any period in which the borrower— 
"(i) is carrying at least one-half the normal full-time academic 
workload at an institution of higher education or at a com-
parable institution outside the United States which is approved 
for this purpose by the Secretary; 
Armed Forces. 
"(ii) is a member of the Armed Forces of the United States, is 
an active duty member of the National Oceanic and Atmos-
pheric Administration Corps, or is an officer in the Commis-
sioned Corps of the Public Health Service; 
22 use 2501 
"(iii) is in service as a volunteer under the Peace Corps Act; 
note. 
"(iv) is in service as a volunteer under the Domestic Volun-
42 use 4951 
teerActofl973; 
"(v) is in service, comparable to the service referred to in 
clauses (iii) and (iv), as a full-time volunteer for an organization 
which is exempt from taxation under section 501(cX3) of the 
26 use 501. 
Internal Revenue Code of 1954; 
"(vi) is serving an internship, the successful completion of 
which is required in order to receive professional recognition 
required to begin professional practice or service; 
"(vii) is temporarily totally disabled (as defined in section 
435(g)), as established by sworn affidavit of a qualified physi-
cian, or during which the borrower is unable to secure employ-
-j 
ment by reason of the care required by a dependent who is so 
disabled; 
"(viii) is on parental leave, as defined in section 435(h); or 
"(ix) is a mother with preschool age children who is just 
entering or reentering the workforce and who is compensated at 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1451 
a rate not to exceed $1 in excess of the rate prescribed by section 
6 of the Fair Labor Standards Act of 1938. 
29 use 206. 
The period during which repa5mient may be deferred by reason of 
clause (ii), (iii), (iv), (v), or (vii) shall not exceed 3 years. The period 
,; 
during which repayment may be deferred by reason of clause (vi) 
shall not exceed 2 years. The period during which repayment may 
be deferred by reason of clause (viii) shall not exceed 6 months. The 
period during which the repa3mient may be deferred by reason of 
clause (ix) shall not exceed 12 months. 
"(B) Any period during which repayment is deferred under 
subparagraph (A) shall not be included in computing the 10-year 
maximum period provided for in subparagraph (A) of paragraph (1). 
"(C) No repayment of principal of, or interest on, any loan for any 
period of study, service, or disability described in subparagraph (A) 
or any combination thereof shall begin until 6 months after the 
completion of such period of study, service, disability, or combina-
tion thereof. 
"(3)(A) The Secretary is authorized, when good cause is shown, to 
extend, in accordance with regulations, the 10-year maximum 
repayment period provided for in subparagraph (A) of paragraph (1) 
with respect to individual loans. 
"(B) Pursuant to uniform criteria established by the Secretary, the Disadvantaged 
repayment period for any student borrower who during the repay- persons. 
ment period is a low-income individual may be extended for a period 
not to exceed 10 years and the repa5mient schedule may be adjusted 
to reflect the income of that individual. 
"(4) The institution may elect— 
"(A) to add the amount of any charge imposed under para-
graph (1)(H) to the principal amount of the loan as of the first 
day after the day on which the installment was due and to 
notify the borrower of the assessment of the charge; or 
"(B) to make the amount of the charge payable to the institu-
tion not later than the due date of the next installment. 
"(d) AVAILABIUTY OF LOAN FUND TO A L L ELIGIBLE STUDENTS.—An 
agreement under this part for payment of Federal capital contribu-
tions shall include provisions designed to make loans from the 
student loan fund established pursuant to such agreement reason-
ably available (to the extent of the available funds in such fund) to 
all eligible students in such institutions in need thereof. 
CANCELLATION OF LOANS FOR CERTAIN PUBLIC SERVICE 
"SEC. 465. (a) CANCELLATION OF PERCENTAGE OF DEBT BASED ON 
20 use I087ee. 
YEARS OF QUAUFYING SERVICE.—(1) The percent specified in para-
graph (3) of this subsection of the total amount of any loan made 
after June 30, 1972, from a student loan fund assisted under this 
part shall be canceled for each complete year of service after such 
date by the borrower under circumstances described in paragraph 
(2). 
"(2) Loans shall be canceled under paragraph (1) for service— 
"(A) as a full-time teacher for service in an academic year in a 
public or other nonprofit private elementary or secondary 
school which is in the school district of a local educational 
agency which is eligible in such year for assistance pursuant to 
title I of the Elementary and Secondary Education Act of 1965, 20 use 2701. 
and which for the purpose of this paragraph and for that year 
has been determined by the Secretary (pursuant to regulations 
100 STAT. 1452 
PUBLIC LAW 99-498—OCT. 17,1986 
* 
and after consultation with the State educational agency of the 
'' - ^ ' 
State in which the school is located) to be a school in which the 
*c 
enrollment of children counted under section 111(c) of the Ele-
20 use 2711. 
"'- 
mentary and Secondary Education Act of 1965 exceeds 30 
percent of the total enrollment of that school and such deter-
mination shall not be made with respect to more than 50 
percent of the total number of schools in the State receiving 
assistance under such title I; 
"(B) as a full-time staff member in a preschool program 
carried on under section 222(a)(1) of the Economic Opportunity 
42 use 2809. 
Act of 1964 which is operated for a period which is comparable 
to a full school year in the locality if the salary of such staff 
V »
< member is not more than the salary of a comparable employee 
of the local educational agency; 
"(C) as a full-time teacher of handicapped children in a public 
or other nonprofit elementary or secondary school system; 
"(D) as a member of the Armed Forces of the United States, 
for services that qualifies for special pay under section 310 of 
title 37, United States Code, as an area of hostilities; or 
22 use 2501 
"(E) as a volunteer under the Peace Corps Act or a volunteer 
note. 
under the Domestic Volunteer Service Act of 1973. 
'*2 use 4951 
PQJ. ^jig purpose of this paragraph, the term 'handicapped children' 
"° • 
, 
has the meaning set forth in section 602(1) of the Education of the 
Handicapped Act. 
"(3)(A) The percent of a loan which shall be canceled under 
paragraph (1) of this subsection is— 
"(i) in the case of service described in subparagraph (A) or (C) 
B- 
of paragraph (2), at the rate of 15 percent for the first or second 
year of such service, 20 percent for the third or fourth year of 
such service, and 30 percent for the fifth year of such service; 
"(ii) in the case of service described in subparagraph (B) of 
.; paragraph (2), at the rate of 15 percent for each year of such 
service; 
"(iii) in the case of service described in subparagraph (D) of 
paragraph (2), not to exceed a total of 50 percent of such loan at 
the rate of 12 ¥2 percent for each year of qualifying service; or 
"(iv) in the case of service described in subparagraph (E) of 
. 
paragraph (2) at the rate of 15 percent for the first or second 
year of such service and 20 percent for the third or fourth year 
of such service. 
"(B) If a portion of a loan is canceled under this subsection for any 
year, the entire amount of interest on such loan which accrues for 
iJ ''i. 
such year shall be canceled. 
"(C) Nothing in this subsection shall be construed to authorize 
refunding of any repayment of a loan. 
"(4) For the purpose of this subsection, the term 'year' where 
applied to service as a teacher means academic year as defined by 
the Secretary. 
"(5) The amount of a loan, and interest on a loan, which is 
canceled under this section shall not be considered income for 
26 use 1 et seq. 
purposes of the Internal Revenue Code of 1954. 
"(b) REIMBURSEMENT FOR CANCELLATION.—The Secretary shall pay 
to each institution for each fiscal year an amount equal to the 
aggregate of the amounts of loans from its student loan fund which 
[<,, 
are canceled pursuant to this section for such year, minus an 
amount equal to the aggregate of the amounts of any such loans so 
canceled which were made from Federal capital contributions to its 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1453 
student loan fund provided by the Secretary under section 468. None 
of the funds appropriated pursuant to section 461(b) shall be avail-
able for pa3rments pursuant to this subsection. 
DISTRIBUTION OF ASSETS FROM STUDENT LOAN FUNDS 
"SEC. 466. (a) IN GENERAL.—After September 30, 1996, and not 
later than March 31,1997, there shall be a capital distribution of the 
balance of the student loan fund established under this part by each 
institution of higher education as follows: 
"(1) The Secretary shall first be paid an amount which bears 
the same ratio to the balance in such fund at the close of 
September 30, 1996, as the total amount of the Federal capital 
contributions to such fund by the Secretary under this part 
bears to the sum of such Federal contributions and the institu-
tion's capital contributions to such fund. 
"(2) The remainder of such balance shall be paid to the 
institution. 
"(b) DISTRIBUTION OF LATE COLLECTIONS.—After March 31, 1997, 
each institution with which the Secretary has made an agreement 
under this part, shall pay to the Secretary the same proportionate 
share of amounts received by this institution after September 30, 
1996, in payment of principal and interest on student loans made 
from the student loan fund established pursuant to such agreement 
(which amount shall be determined after deduction of any costs of 
litigation incurred in collection of the principal or interest on loans 
from the fund and not already reimbursed from the fund or from 
such payments of principal or interest), as was determined for the 
Secretary under subsection (a). 
"(c) DISTRIBUTION OF EXCESS CAPITAL.—Upon a finding by 
the 
institution or the Secretary prior to October 1, 1997, that the liquid 
assets of a student loan fund established pursuant to an agreement 
under this part exceed the amount required for loans or otherwise in 
the foreseeable future, and upon notice to such institution or to the 
Secretary, as the case may be, there shall be, subject to such 
limitations as may be included in regulations of the Secretary or in 
such agreement, a capital distribution from such fund. Such capital 
distribution shall be made as follows: 
"(1) The Secretary shall first be paid an amount which bears 
the same ratio to the total to be distributed as the Federal 
capital contributions by the Secretary to the student loan fund 
prior to such distribution bear to the sum of such Federal 
capital contributions and the capital contributions to the fund 
made by the institution. 
"(2) The remainder of the capital distribution shall be paid to 
the institution. 
20 u s e 1087ff. 
rSo.c 
"COLLECTION OF DEFAULTED LOANS 
"SEC. 467. (a) AUTHORITY OF SECRETARY TO COLLECT REFERRED, 
TRANSFERRED, OR ASSIGNED LOANS.—With respect to any loan— 
"(1) which was made under this part, and 
"(2) which is referred, transferred, or assigned to the Sec-
retary by an institution with an agreement under section 463(a), 
the Secretary is authorized to attempt to collect such loan by any 
means authorized by law for collecting claims of the United States 
(including referral to the Attorney Greneral for litigation) and under 
Claims. 
20 u s e 1087gg. 
100 STAT. 1454 
PUBLIC LAW 99-498—OCT. 17, 1986 
20 use 1087hh. 
Ck)ntracts. 
20 use 1087dd 
note. 
such terms and conditions as the Secretary may prescribe, including 
reimbursement for expenses reasonably incurred in attempting such 
collection. 
"(b) 
COLLECTION 
OF REFERRED, 
TRANSFERRED, 
OR 
ASSIGNED 
LOANS.—The Secretary shall continue to attempt to collect any loan 
referred, transferred, or assigned under paragraph (5)(A), (5)(B)(i), or 
(6) of section 463(a) until all appropriate collection efforts, as deter-
mined by the Secretary, have been expended. 
"GENERAL AUTHORITY OF SECRETARY 
"SEC. 468. In carrying out the provisions of this part, the Sec-
retary is authorized— 
"(1) to consent to modification, with respect to rate of interest, 
time of payment of any installment of principal and interest or 
any portion thereof, or any other provision of any note evidenc-
, ing a loan which has been made under this part; 
"(2) to enforce, pay, compromise, waive, or release any right, 
r
r
f
>
i title, claim, lien, or demand, however acquired, including any 
equity or any right of redemption; 
"(3) to conduct litigation in accordance with the provisions of 
section 432(a)(2); and 
"(4) to enter into a contract or other arrangement with State 
or nonprofit agencies and, on a competitive basis, with collec-
tion agencies for servicing and collection of loans under this 
part.", 
(b) 
EFFECTIVE 
DATES.—(1) The changes made 
in 
sections 
464(c)(1)(A), 464(c)(2), and 465(aX2)(E) of the Act shall apply only to 
loans made to cover the costs of instruction for periods of enrollment 
beginning on or after July 1, 1987, to individuals who are new 
borrowers on that date. 
(2) Section 463(a)(9) of the Act as amended by this section shall 
apply only to loans made for periods of enrollment beginning on or 
after July 1,1987. 
(3) For the purpose of this subsection, the term "new borrower" 
means, with respect to any date, an individual who on that date has 
no outstanding balance of principal or interest owing on any loan 
made under part E of title IV of the Act. 
SEC. 406. ADDITION OF A NEW PART F RELATING TO NEED ANALYSIS FOR 
STUDENT ASSISTANCE. 
(a) AMENDMENT.—Title IV of the Act is further amended by 
redesignating part F as part G and by inserting after part E the 
following new part: 
*
'
*
?
'
' 
"PART F—NEED ANALYSIS 
AMOUNT OF NEED 
20 use I087kk. 
"SEC. 471. Except as otherwise provided therein, the amount of 
need of any student for financial assistance under this title (except 
subparts 1 and 3 of part A) is equal to the cost of attendance of such 
student minus the expected family contribution for such student. 
C
O
S
T OF ATTENDANCE 
20 use 1087//. 
"SEC. 472. For the purpose of this title (except for subpart 1 of part 
A and subject to section 478), the term 'cost of attendance' means— 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1455 
"(1) tuition and fees normally assessed a student carrying the 
same academic workload as determined by the institution, and 
including costs for rental or purchase of any equipment, mate-
rials, or supplies required of all students in the same course of 
study; 
"(2) an allowance for books, supplies, transportation, and 
miscellaneous personal expenses for a student attending the 
institution on at least a half-time basis, as determined by the 
institution; 
"(3) an allowance (as determined by the institution) for room 
and board costs incurred by the student which— 
"(A) shall be an allowance of not less than $1,500 for a 
student without dependents residing at home with parents; 
"(B) for students without dependents residing in institu-
tionally owned or operated housing, shall be a standard 
allowance determined by the institution based on the 
amount normally assessed most of its residents for room 
' 
and board; and 
"(C) for all other students shall be an allowance based on 
the expenses reasonably incurred by such students for room 
and board, except that the amount may not be less than 
$2,500; 
"(4) for less than half-time students (as determined by the 
institution) tuition and fees and an allowance for only books, 
supplies, and transportation (as determined by the institution) 
and dependent care expenses (in accordance with paragraph (7)); 
"(5) for a student engaged in a program of study by cor-
respondence, only tuition and fees and, if required, books and 
supplies, travel, and room and board costs incurred specifically 
in fulfilling a required period of residential training; 
"(6) for a student enrolled in an academic program which 
normally includes a formal program of study abroad, reason-
able costs associated with such study (as determined by the 
institution); 
"(7) for a student with one or more dependents, an allowance 
(as determined by the institution) based on the expenses reason-
ably incurred for dependent care based on the number and age 
of such dependents; 
"(8) for a handicapped student, an allowance (as determined 
by the institution) for those expenses related to his or her 
handicap, including special services, transportation, equipment, 
and supplies that are reasonably incurred and not provided for 
by other assisting agencies; and 
"(9) for a student receiving all or part of his or her instruction 
by means of telecommunications technology, no distinction 
shall be made with respect to the mode of instruction in deter-
mining costs, but this paragraph shall not be construed to 
permit including the cost of rental or purchase of equipment. 
Handicapped 
persons. 
FAMILY CONTRIBUTION 
"SEC. 473. For the purpose of this title, except subparts 1 and 3 of 
part A, the term 'family contribution' with respect to any student 
means the amount which the student and his or her family may be 
reasonably expected to contribute toward his or her postsecondary 
education for the academic year for which the determination is 
made, as determined in accordance with this part. 
20 u s e 1087mm. 
100 STAT. 1456 
PUBLIC LAW 99-498—OCT. 17, 1986 
% « 
"DATA ELEMENTS USED IN DETERMINING EXPECTED FAMILY 
CONTRIBUTION 
20 use I087nn. 
"SEC. 474. The following data elements are considered in deter-
mining the expected family contribution: 
"(1) the available income of (A) the student and his or her 
spouse, or (B) the student (and spouse) and the student's par-
ents, in the case of a dependent student; 
"(2) the number of dependents in the family of the student; 
"(3) the number of dependents in the family of the student 
who are enrolled in, on at least a half-time basis, a program of 
postsecondary education and for whom the family may reason-
ably be expected to contribute to their postsecondary education; 
"(4) the net assets of (A) the student and his or her spouse, 
and (B) the student (and spouse) and the student's parents, in 
the case of a dependent student; 
"(5) the marital status of the student; 
"(6) any unusual medical and dental expenses of (A) the 
student and the student's parents, in the csise of a dependent 
student, or (B) the student and his or her dependents, in the 
case of an independent student; 
"(7) the number of dependent children other than the student 
enrolled in a private elementary or secondary institution and 
the unreimbursed tuition paid (A) in the case of a dependent 
student, by the student's parents for such dependent children, 
or (B) in the case of an independent student with dependents, by 
the student or his or her spouse for such dependent children 
who are so enrolled; and 
"(8) the additional expenses incurred (A) in the case of a 
dependent student, when both parents of the student are em-
ployed or when the family is headed by a single parent who is 
employed, or (B) in the case of an independent student, when 
both the student and his or her spouse are employed or when 
the employed student qualifies as a surviving spouse or as a 
head of a household under section 2 of the Internal Revenue 
26 use 2. 
Code of 1954. 
"FAMILY CONTRIBUTION FOR DEPENDENT STUDENTS 
20 use I087oo. 
"SEC. 475. (a) COMPUTATION OF EXPECTED FAMILY CONTRIBUTION.— 
For each dependent student the expected family contribution is 
equal to the sum of— 
"(1) the parents' contribution from adjusted available income 
(determined in accordance with subsection (b)); 
"(2) the student (and spouse) contribution from available 
income (determined in accordance with subsection (g)); and 
"(3) the student (and spouse) income supplemental amount 
from assets (determined in accordance with subsection (h)). 
"(b) 
PARENTS' 
CONTRIBUTION 
FROM 
ADJUSTED 
AVAILABLE 
INCOME.—The parents' contribution from adjusted available income 
.., ,. 
is equal to the amount determined by— 
"(1) computing adjusted available income by adding— 
"(A) the parents' available income (determined in accord-
ance with subsection (c)); and 
"(B) the parents' income supplemental amount from 
assets (determined in accordance with subsection (d)); 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1457 
ft, 
"(2) assessing such adjusted available income in accordance 
^ with the assessment schedule set forth in subsection (e); and 
"(3) dividing the assessment resulting under paragraph (2) by 
the number of family members who will be attending, on at 
least a half-time basis, a program of postsecondary education 
during the award period for which assistance under this title is 
requested; 
except that the amount determined under this subsection shall not 
be less than zero. 
"(c) PARENTS' AVAILABLE INCOME.— 
"(1) IN GENERAL.—The parents' available income is deter-
mined by deducting from total income (as defined in section 
480)— 
"(A) Federal income taxes; 
"(B) an allowance for State and other taxes, determined 
in accordance with paragraph (2); 
"(C) an allowance for social security taxes, determined in 
accordance with paragraph (3); 
"(D) a standard maintenance allowance, determined in 
accordance with paragraph (4); 
"(E) an employment expense allowance, determined in 
accordance with paragraph (5); 
"(F) a medical-dental expense allowance, determined in 
accordance with paragraph (6); and 
"(G) an educational expense allowance, determined in 
accordance with paragraph (7). 
"(2) ALLOWANCE FOR STATE AND OTHER TAXES.—The allowance 
for State and other taxes is equal to an amount determined by 
; 
multiplying total income (as defined in section 480) by a 
percentage determined according to the following table (or a 
i 
successor table prescribed by the Secretary under section 479): 
"Percentages for Computation of State and Other Tax Allowance 
And parents' total income is— 
If parents' State or territory of residence is— 
i 
x. 
$15,000 or 
^^^'^^ '"<"* 
then the percentage is— 
Alaska, Puerto Rico, Wyoming 
3 
2 
American Samoa, Guam, Louisiana, Nevada, 
Texas, Trust Territory, Virgin Islands 
4 
3 
Florida, South Dakota, Tennessee, New Mexico 
5 
4 
North Dakota, Washington 
6 
5 
Alabama, Arizona, Arkansas, Indiana, Mississippi, 
Missouri, Montana, New Hampshire, Oklaho-
ma, West Virginia 
7 
6 
Colorado, Connecticut, Georgia, Illinois, Kansas, 
Kentucky 
8 
7 
California, Delaware, Idaho, Iowa, Nebraska, 
North Carolina, Ohio, Pennsylvamia, South 
Carolina, Utah, Vermont, Virginia, Canada, 
Mexico 
Maine, New Jersey 
District of Columbia, Hawaii, Maryland, Massa-
chusetts, Oregon, Rhode Island 
Michigan, Minnesota 
Wisconsin 
New York 
9 
10 
11 
12 
13 
14 
8 
9 
10 
11 
12 
13 
100 STAT. 1458 
PUBLIC LAW 99-498—OCT. 17, 1986 
26 use 2. 
"(3) ALLOWANCE FOR SOCIAL SECURITY TAXES.—The allowance 
for social security taxes is equal to the amount earned by each 
parent multiplied by the social security withholding rate appro-
priate to the tax year of the earnings, up to the maximum 
statutory social security tax withholding amount for that same 
tax year. 
"(4) STANDARD MAINTENANCE ALLOWANCE.—The standard 
maintenance allowance is the amount of reasonable living ex-
penses that would be associated with the maintenance of an 
individual or family. The standard maintenance allowance is 
determined by the following table (or a successor table pre-
scribed by the Secretary under section 479): 
"Standard Maintenance Allowance 
Family Size 
(including student) 
2 
3 
l'^;v4-i :---':^ 
5 
6 
For each 
additional add: 
1 
$8,380 
10,440 
12,890 
15,210 
17,790 
2,010 
2 
$6,950 
9,010 
11,460 
13,780 
16,360 
2,010 
Number 
3 
$7,580 
10,030 
12,350 
14,930 
2,010 
in College 
4 
$8,600 
10,920 
13,500 
2,010 
5 
: i ; . , • , . , 
$8,490 
12,070 
2,010 
For each 
additional 
substract: 
1,430 
"(5) EMPLOYMENT EXPENSE ALLOWANCE.—The employment 
expense allowance is determined as follows: 
"(A) If both parents were employed in the year for which 
their income is reported and both have their incomes 
reported in determining the expected family contribution, 
such allowance is equal to the lesser of $2,100 or 35 percent 
of the earned income of the parent with the lesser earned 
income. 
"(B) If a parent qualifies as a head of household as 
defined in section 2 of the Internal Revenue Code, such 
allowance is equal to the lesser of $2,100 or 35 percent of his 
or her earned income. 
For any award year after award year 1987-1988, this paragraph 
shall be applied by increasing the dollar amount specified in 
subparagraphs (A) and (B) to reflect increases in the amount 
and percent of the Bureau of Labor Standards budget of the 
marginal costs for meals away from home, apparel and upkeep, 
transportation, and housekeeping services for a two-worker 
versus one-worker family. 
"(6) MEDICAL-DENTAL EXPENSE ALLOWANCE.—The medical-
dental expense allowance is equal to the amount by which the 
sum of unreimbursed medical and dental expenses, including 
medical insurance premiums, exceeds 5 percent of the total 
income of the parents. 
"(7) EDUCATIONAL EXPENSE ALLOWANCE.—The educational 
expense allowance is equal to the unreimbursed tuition and fees 
paid by the student's parents for each dependent child, other 
than the student, enrolled in an elementary or secondary 
school, not to exceed for each such child the national average 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1459 
per pupil instructional cost as published by the National Center 
for Educational Statistics using the most recent available data. 
'(d) PARENTS' INCOME SUPPLEMENTAL AMOUNT FROM ASSETS.— 
"(1) IN GENERAL.—The parents' income supplemental amount 
from assets is equal to— 
"(A) the parental net worth (determined in accordance 
with paragraph (2)); minus 
"(B) the asset protection allowance (determined in accord-
ance with paragraph (3)); multiplied by 
"(C) the asset conversion rate (determined in accordance 
with paragraph (4)). 
"(2) PARENTAL NET WORTH.—The parental net worth is cal-
culated by adding— 
"(A) the current balance of checking and savings ac-
counts and cash on hand; 
"(B) the net value of investments and real estate, includ-
ing the net value of the principal place of residence except 
in the case of a dislocated worker (certified in accordance 
with title III of the Job Training Partnership Act) or a 
dislocated homemaker (as defined in section 480(e) of this 
Act); and 
"(C) the adjusted net worth of a business or farm, com-
puted on the basis of the net worth of such business or farm 
(hereafter in this subsection referred to as *NW'), deter-
mined in accordance with the following table (or a successor 
table prescribed by the Secretary under section 479): 
"Adjusted Net Worth of a Business or Farm 
29 u s e 1651. 
If the net worth of a business or farm 
is— 
Then the adjusted net worth is: 
Less than $1 
$0 
$l-$65,000 
40 percent of NW 
$65,001-3195,000 
$26,000 plus 50 percent of NW over 
$65,000 
$195,001-$325,000 
$91,000 plus 60 percent of NW over 
$195,000 
$325,001 or more 
$169,000 plus 100 percent of NW over 
$325,000 
"(3) ASSET PROTECTION ALLOWANCE.—The asset protection 
allowance is calculated according to the following table: 
"Asset Protection Allowances for Families and Students 
If the age of the oldest parent is— 
And there are 
two parents 
one parent 
then the asset protection 
allowance' 
$0 
1,900 
3,900 
5,800 
7,800 
9,700 
11.700 
13.600 
is— 
$0 
1,500 
3,000 
4,500 
6,100 
7,600 
9,100 
10,600 
25 or less. 
26 
27 
28 
29 
30 
31 
32 
71-19A 0 -
- 13 : QL. 3 Part2 
100 STAT. 1460 
PUBLIC LAW 99-498—OCT. 17,1986 
Tj'i 
"Asset Protection Allowances for Families and Students—Continued 
And there 
are 
If 
the 
age 
of 
the 
oldest 
parent 
is— 
two 
parents 
one parent 
33 
15,600 
12,100 
34 
17,500 
13,600 
35 
^. 
19,500 
15,100 
36 
.y... 
21,400 
16,600 
37 
23,400 
18,200 
38 
25,300 
19,700 
39 
27,300 
21,200 
40 
29,200 
22,700 
41 
30,000 
23,200 
42 
30,800 
23,800 
43 
31,600 
24,200 
44 
32,500 
24,800 
45 
33,300 
25,400 
46 
34,200 
26,100 
47 
35,200 
26,700 
.
;
. )r I 
ic 
48 
36,100 
27,200 
49 
37,300 
27,900 
50 
38,300 
28,800 
51 
39,600 
29,500 
52 
40,900 
30,300 
53 
42,000 
31,000 
54 
43,400 
32,000 
55 
44,800 
32,800 
56 
46,300 
33,800 
57 
48,100 
34,600 
58 
49,700 
35,700 
59 
51,600 
36,800 
60 
53,300 
37,900 
61 
55,300 
7 
39,000 
62 
57,400 ^ 
'
•
'
"
" 40,200 
63 
59,600 
41,400 
64 
61,800 
42,600 
65 
or 
more 
64,100 
44,100 
"(4) ASSET CONVERSION RATE.—The asset conversion rate is 
^' 
determined as follows: 
.
,
< 
"(A) if the parental net worth (determined in accordance 
with paragraph (2)) minus the asset protection allowance 
- — 
(determined in accordance with paragraph (3)) is equal to or 
greater than zero, the conversion rate is 12 percent; 
'^ • 
"(B) if such parental net worth minus such asset protec-
tion allowance is less than zero and the parents' contribu-
tion from available income (determined in accordance with 
subsection (c)) is greater than $15,000, the conversion rate is 
zero percent; 
"(C) if such parental net worth minus such asset protec-
r. r. tion allowance is less than zero and such parents' available 
income is equal to or greater than zero but less than 
j>,r $15,000, the conversion rate (rounded to 3 decimal places) is 
equal to 6 percent multiplied by a fraction— 
; 
"(i) the numerator of which is equal to $15,000 minus 
; 
such parents'available income; and 
"(ii) the denominator of which is $15,000; and 
"(D) if such parental net worth minus such £isset protec-
tion allowance is less than zero and such parents' available 
income is equal to or less than zero, the conversion rate is 6 
percent. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1461 
"(e) ASSESSMENT SCHEDULE.—The adjusted available income (as 
determined under subsection (bXD and hereafter in this subsection 
referred to as 'AAD is assessed according to the following table (or a 
successor table prescribed by the Secretary under section 479): 
"Parents' Assessment From Adjusted Available Income (AAI) 
If AAI is— 
Then the assessment is— 
Less than $3,409 
-$750 
$3,409 to $7,500 
22% of AAI 
$7,501 to $9,400 
$1,650 + 25% of AAI over $7,500 
$9,401 to $11,300 
$2,125 + 29% of AAI over $9,400 
$11,301 to $13,200 
$2,676 + 34% of AAI over $11,300 
$13,201 to $15,100 
$3,322 + 40% of AAI over $13,200 
$15,101 or more 
$4,082 + 47% of AAI over $15,100 
"(f) COMPUTATIONS IN CASE OF SEPARATION, DIVORCE, REMARRIAGE, 
O
R DEATH.— 
"(1) DIVORCED OR SEPARATED PARENTS.—Income for a student 
whose parents are divorced or separated is determined under 
the following procedures: 
"(A) Include only the income of the parent with whom 
the student resided for the greater portion of the 12-month 
period preceding the date of the application. 
"(B) If the preceding criterion does not apply, include 
only the income of the parent who provided the greater 
portion of the student's support for the 12-month period 
preceding the date of application. 
"(C) If neither of the preceding criteria apply, include 
only the income of the parent who provided the greater 
support during the most recent calendar year for which 
parental support was provided. 
"(2) DEATH OF A PARENT.—Income in the case of the death of 
any parent is determined as follows: 
"(A) If either of the parents have died, the student shall 
include only the income of the surviving parent. 
"(B) If both parents have died, the student shall not 
report any parental income. 
"(3) REMARRIED PARENTS.—Income in the case of a parent 
whose income is taken into account under paragraph (1) of this 
subsection, or a parent who is a widow or widower and whose 
income is taken into account under paragraph (2) of this subsec-
tion, has remarried, is determined as follows: The income of 
that parent's spouse shall be included in determining the stu-
dent's annual adjusted family income i
f
— 
"(A) the student's parent and the stepparent are married 
as of the date of application for the award year concerned; 
and 
"(B) the student is not an independent student. 
"(g) STUDENT CONTRIBUTION FROM AVAILABLE INCOME.— 
"(1) IN GENERAL.—The student (and spouse) contribution from 
available income is equal to the greater of— 
"(A) a mandatory self-help amount of $700 for a first-year 
*
^
' 
undergraduate student; 
"(B) a mandatory self-help amount of $900 for any other 
student; or 
100 STAT. 1462 
PUBLIC LAW 99-498—OCT. 17, 1986 
jgi * «,. 
"(C) an amount equal to 70 percent of the student's total 
income (determined in accordance with section 480) minus 
the adjustment to student (and spouse) income (determined 
T 
in accordance with paragraph (3)). 
"(2) ADJUSTMENT TO STUDENT (AND SPOUSE) INCOME.—The 
adjustment to student (and spouse) income is equal to the sum 
of— 
"(A) estimated Federal income taxes of the student (and 
spouse); 
"(B) an allowance for State and local income taxes (deter-
mined in accordance with paragraph (3)); and 
"(C) an allowance for social security taxes determined in 
accordance with paragraph (4). 
"(3) ALXOWANCE FOR STATE AND LOCAL INCOME TAXES.—The 
allowance for State and local income taxes is equal to an 
amount determined by multiplying total taxable income (as 
defined in section 480) by a percentage determined according to 
the following table: 
"Percentages for Computation of State and Local Income Tax Allowance 
If the students'State or territory of residence is— 
The percentage 
Alaska, American Samoa, Florida, Guam, Nevada, South 
Dakota, Tennessee, Texas, Trust Territory, Virgin Islands, 
Washington, Wyoming 
0 
Connecticut, Louisiana, Puerto Rico 
1 
Arizona, New Hampshire, New Mexico, North Dakota 
2 
Alabama, Colorado, Illinois, Indiana, Kansas, Mississippi, Mis-
souri, Montana, Nebraska, New Jersey, Oklahoma 
3 
Arkansas, Georgia, Iowa, Kentucky, Maine, Pennsylvania, 
Utah, Vermont, Virginia, West Virginia, Canada, Mexico 
4 
California, Idaho, Massachusetts, North Carolina, Ohio, Rhode 
Island, South Carolina 
5 
Hawaii, Marylsmd, Michigan, Wisconsin 
6 
Delaware, District of Columbia, Minnesota, Oregon 
7 
New York 
8 
"(4) ALLOWANCE FOR SOCIAL SECURITY TAXES.—The allowance 
for social security taxes is equal to the amount earned by the 
student (and spouse) multiplied by the social security withhold-
ing rate appropriate to the tax year of the earnings, up to the 
maximum statutory social security tax withholding amount for 
that same tax year. 
"(h) STUDENT (AND SPOUSE) INCOME SUPPLEMENTAL AMOUNT FROM 
ASSETS.—The student (and spouse) supplemental income amount 
from assets is determined by multiplying by 35 percent the sum of— 
"(1) the current balguice of checking and savings accounts and 
cash on hand; and 
"(2) the net value of investments and real estate, including 
the net value in the principal place of residence except in the 
case of a dislocated worker (certified in accordance with title III 
29 use 1651. 
of the Job Training Partnership Act) or a dislocated homemaker 
(as defined in section 480(e) of this Act). 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1463 
"FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITHOUT 
DEPENDENTS 
"SEC. 476. (a) COMPUTATION OF EXPECTED FAMILY CONTRIBUTION.— 
20 use lOSTpp. 
For each independent student without dependents (including a 
spouse), the expected family contribution is equal to the sum of— 
"(1) the student's contribution from income (determined in 
accordance with subsection (b)); and 
"(2) the student's income supplemental amount from assets 
(determined in accordance with subsection (c)). 
"(b) STUDENT'S CONTRIBUTION FROM INCOME.— 
"(1) IN GENERAL.—The student's contribution from income is 
determined by— 
"(A) computing the student's available taxable income by 
deducting from the student's adjusted gross income— 
"(i) Federal income taxes; 
"(ii) an allowance for State and local income taxes, 
determined in accordance with paragraph (2); 
"(iii) the allowance for social security taxes, deter-
mined in accordance with paragraph (3); and 
"(iv) a maintenance allowance for periods of non-
a> ,' 
enrollment not to exceed $600 per month; 
"(B) assessing such available taxable income in accord-
ance with paragraph (4); and 
"(C) adding to the assessment resulting under subpara-
graph (B) the amount of the untaxed income and benefits of 
the student (determined in accordance with section 480(c)), 
except that the student's contribution from income shall not be 
less than $1,200. 
"(2) ALLOWANCE FOR STATE AND LOCAL INCOME TAXES.—The 
allowance for State and local income taxes is equal to an 
amount determined by multiplying total taxable income (as 
defined in section 480) by a percentage determined according to 
the following table (or a successor table prescribed by the 
Secretary under section 479): 
"Percentages for Computation of State and Local Income Tax Allowance 
If the students' State or territory of residence is— 
'^^^ p^centage 
Alaska, American Samoa, Florida, Guam, Nevada, South 
Dakota, Tennessee, Texas, Trust Territory, Virgin Islands, 
Washington, Wyoming 
0 
Connecticut, Louisiana, Puerto Rico 
1 
Arizona, New Hampshire, New Mexico, North Dakota 
2 
Alabama, Colorado, Illinois, Indiana, Kansas, Mississippi, Mis-
souri, Montana, Nebraska, New Jersey, Oklahoma 
3 
Arkansas, Georgia, Iowa, Kentucky, Maine, Pennsylvania, 
Utah, Vermont, Virginia, West Virginia, Canada, Mexico 
4 
Cedifornia, Idaho, Massachusetts, North Carolina, Ohio, Rhode 
Mand, South Carolina 
5 
Hawaii, Maryland, Michigan, Wisconsin 
6 
Delaware, District of Columbia, Minnesota, Oregon 
7 
New York 
8 
"(3) ALLOWANCE FOR SOCIAL SECURITY TAXES.—The allowance 
for social security taxes is equal to the amount earned by the 
student multiplied by the social security withholding rate 
Bl 
100 STAT. 1464 
PUBLIC LAW 99-498—OCT. 17, 1986 
appropriate to the tax year of the earnings, up to the maximum 
statutory social security tax withholding amount for that same 
tax year. 
qqv fci >^ii es 
"(4) ASSESSMENT OF AVAILABLE TAXABLE INCOME.—The stu-
dent's available taxable income (determined in accordance with 
paragraph (1)(A) of this subsection) is assessed as follows: 
"(A) if such available taxable income is equal to or 
^^ .
^
^ 
greater than $0 but less than or equal to $8,900, then the 
assessment is equal to 70 percent of such available taxable 
income; and 
"(B) if such available taxable income is greater than 
$8,900, then the assessment is equal to $6,230 plus 90 
percent of such available taxable income in excess of $8,900. 
"(c) STUDENT'S INCOME SUPPLEMENTAL AMOUNT FROM ASSETS.— 
"(1) IN GENERAL.—The student's 
income 
supplemental 
amount from assets is equal to— 
"(A) the student's net worth (determined in accordance 
,1ft 
with paragraph (2)); minus 
"(B) the asset protection allowance (determined in accord-
j I
f 
ance with paragraph (3)); multiplied by 
"(C) the asset conversion rate (determined in accordance 
4yv 
with paragraph (4)). 
"(2) STUDENT'S NET WORTH.—The student's net worth is cal-
culated by adding— 
"(A) the current balance of checking and savings ac-
counts and cash on hand; 
"(B) the net value of investments and real estate, includ-
ing the net value in the principal place of residence except 
"
^ 
in the case of a dislocated worker (certified in accordance 
29 use 1651. 
with title III of the Job Training Partnership Act) or a 
dislocated homemaker (as defined in section 480(e) of this 
Act); and 
"(C) the adjusted net worth of a business or farm, com-
puted on the basis of the net worth of such business or farm 
(hereafter referred to as *NW'), determined in accordance 
with the following table (or a successor table prescribed by 
the Secretary under section 479): 
"Adjusted Net Worth of a Business or Farm 
If the net worth of^ business or farm 
^hen the adjusted net worth i s -
Less than $1 
$0 
$l-$65,000 
40 percent of NW 
$65,001-$195,000 
$26,000 plus 50 percent of NW over 
$65,000 
$195,001-$325,000 
$91,000 plus 60 percent of NW over 
$195,000 
$325,001 or more 
$169,000 plus 100 percent of NW over 
$325,000 
"(3) ASSET PROTECTION ALLOWANCE.—The asset protection 
allowance is calculated according to the following table: 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1465 
"Asset Protection Allowances for Students 
If the age of the student i s - 
"^"^ S o ^ c e T - ^ * ' " " 
25 or less 
$0 
26 
1,500 
27 
3,000 
28 
4,500 
29 
6,100 
30 
7,600 
31 
9,100 
32 
10,600 
33 
12,100 
34 
13,600 
35 
15,100 
36 
16,600 
37 
18,200 
38 
19,700 
39 
21,200 
40 
22,700 
41 
23,200 
42 
23,800 
43 
24,200 
44 
24,800 
45 
25,400 
46 
26,100 
47 
26,700 
48 
27,200 
49 
27,900 
50 
28,800 
51 
29,500 
52 
30,300 
53 
31,000 
54 
32,000 
55 
32,800 
56 
33,800 
57 
34,600 
58 
35,700 
59 
36,800 
60 
37,900 
61 
39,000 
62 
40,200 
63 
41,400 
64 
42,600 
65 or more 
44,100 
"(4) ASSET CONVERSION RATE.—The asset conversion rate is 35 
percent. 
"FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITH 
DEPENDENTS 
"SEC. 477. (a) COMPUTATION OF EXPECTED FAMILY CONTRIBUTION.— 
20 use I087qq. 
For each independent student with dependents (including a spouse) 
the expected family contribution is equal to the amount determined 
b y -
"(1) computing adjusted available income by adding— 
"(A) the family's available income (determined in accord-
ance with subsection (b)); and 
"(B) the family's income supplemental amount from 
assets (determined in accordance with subsection (c)); 
"(2) assessing such adjusted available income in accordance 
with an assessment schedule set forth in subsection (d); and 
100 STAT. 1466 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(3) dividing the assessment resulting under paragraph (2) by 
-" 
the number of family members who will be attending, on at 
^ least a half-time basis, a program of postsecondary education 
during the award period for which assistance under this title is 
requested; 
except that the amount determined under this subsection shall not 
be less than zero. 
"(b) FAMILY'S AVAILABLE INCOME.— 
"(1) IN GENERAL.—The family's available income is deter-
mined by deducting from total income (as defined in section 
480)— 
"(A) Federal income taxes; 
"(B) an allowance for State and other taxes, determined 
in accordance with paragraph (2); 
"(C) an allowance for social security taxes, determined in 
accordance with paragraph (3); 
"(D) a standard maintenance allowance, determined in 
accordance with paragraph (4); 
"(E) an employment expense allowance, determined in 
accordance with paragraph (5); 
"(F) a medical-dental expense allowance, determined in 
accordance with paragraph (6); and 
"(G) an educational expense offset, determined in accord-
ance with paragraph (7); 
except that the family's available income shall not be less than 
$700 for a first year undergraduate student or $900 for any 
other student. 
"(2) ALLOWANCE FOR STATE AND OTHER TAXES.—The allowance 
for State and other taxes is equal to an amount determined by 
multiplying total income (as defined in section 480) by a 
percentage determined according to the following table (or a 
successor table prescribed by the Secretary under section 479): 
"Percentages for Computation of State and Other Tax Allowance 
And student's total income is— 
If student's State or territory of residence is— 
i 
.. 
jjg QQQ 
$15,000 
more 
-, 
iff 
. 
then the percentage is— 
Alaska, Puerto Rico, Wyoming 
3 
. .: 
4^j 
American Samoa, Guam, Louisiana, Nevada, 
Texas, Trust Territory, Virgin Islands 
4 
^ ,£ -
, ^y. 
3 
Florida, South Dakota, Tennessee, New Mexico 
5 
- *
* 
^ 
North Dakota, Washington 
6 
5 
Alabama, Arizona, Arkansas, Indiana, Mississippi, 
, 
. j. 
Missouri, Montana, New Hampshire, Oklaho- 
'• 
ma. West Virginia 
7 
6 
Colorado, Connecticut, Georgia, Illinois, Kansas,' 
Kentucky 
8 
7 
California, Delaware, Idaho, Iowa, Nebraska, 
, 
North Carolina, Ohio, Pennsylvania, South 
^' 
Carolina, Utah, Vermont, Virginia, Canada, 
Mexico 
Maine, New Jersey 
District of Columbia, Hawaii, Maryland, Massa-
chusetts, Oregon, Rhode Island 
Michigan, Minnesota 
Wisconsin 
9 
10 
11 
12 
13 
. 
8 
9 
10 
11 
12 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1467 
"Percentages for Computation of State and Other Tax Allowance—Continued 
And student's total income is— 
If student's State or territory of residence is— 
less than 
$15,000 
$15,000 or 
more 
then the percentage is— 
New York. 
14 
13 
"(3) ALLOWANCE FOR SOCIAL SECURITY TAXES.—The allowance 
for social security taxes is equal to the amount earned by the 
student and the student's spouse multiplied by the social secu-
rity withholding rate appropriate to the tax year of the earn-
ings, up to the maximum statutory social security tax withhold-
ing amount for that same tax year. 
"(4) STANDARD MAINTENANCE ALLOWANCE.—The standard 
maintenance allowance is the amount of reasonable living ex-
penses that would be associated with the maintenance of an 
individual or family. The standard maintenance allowance is 
determined by the following table (or a successor table pre-
scribed by the Secretary under section 479): 
"Standard Maintenance Allowance 
Family size 
(including student) 
2 
« » • 
" 
4 
"• 
5 
6 
For each 
additional add: 
1 
$8,380 
10,440 
12,890 
15,210 
17,790 
2,010 
2 
$6,950 
9,010 
11,460 
13,780 
16,360 
2,010 
Number 
3 
$7,580 
10,030 
12,350 
14,930 
2,010 
in college 
4 
$8,600 
10,920 
13,500 
2,010 
5 
$8,490 
12,070 
2,010 
For each 
additional 
subtract: 
1,430 
"(5) EMPLOYMENT EXPENSE ALLOWANCE.—The employment ex-
pense allowance is determined as follows: 
"(A) If both the student and a spouse were employed in 
the year for which their income is reported and both have 
^ 
their incomes reported in determining the expected family 
contribution, such allowance is equal to the lesser of $2,000 
or 35 percent of the earned income of the student or spouse 
with the lesser earned income. 
"(B) If a student qualifies as a head of household as 
defined in section 2 of the Internal Revenue Code, such 
allowance is equal to the lesser of $2,100 or 35 percent of his 
or her earned income. 
For any award year after award year 1987-1988, this paragraph 
shall be applied by increasing the dollar amount specified in 
subparagraphs (A) and (B) to reflect increases in the amount 
and percent of the Bureau of Labor Standards budget of the 
marginal costs for meals away from home, apparel and upkeep, 
transportation, and housekeeping services for a two-worker 
versus one-worker family. 
"(6) MEDICAL-DENTAL EXPENSE ALLOWANCE.—The medical-
dental expense allowance is equal to the amount by which the 
sum of unreimbursed medical and dental expenses, including 
26 use 2. 
100 STAT. 1468 
PUBLIC LAW 99-498—OCT. 17, 1986 
medical insurance premiums, exceeds 5 percent of the total 
income of the family. 
"(7) EDUCATIONAL EXPENSE ALLOWANCE.—The educational ex-
pense allowance is equal to the unreimbursed tuition and fees 
^ paid by the student or the student's spouse, or both, for each 
dependent child, enrolled in elementary or secondary school, 
not to exceed for each such child the national average per pupil 
instructional cost sis published by the National Center for Edu-
cational Statistics using the most recent available data. 
"(c) FAMILY'S INCOME SUPPLEMENTAL AMOUNT FROM ASSETS.— 
"(1) IN GENERAL.—The family's income supplemental amount 
from assets is equal to— 
"(A) the family net worth (determined in accordance with 
paragraph (2)); minus 
'^ 
"(B) the asset protection allowance (determined in accord-
.^ _ 
ance with paragraph (3)); multiplied by 
iff 
"(C) the asset conversion rate (determined in accordance 
; 
with paragraph (4)). 
^ 
"(2) FAMILY NET WORTH.—The family net worth is calculated 
[^. by adding— 
"(A) the current balance of checking and savings ac-
counts and cash on hand; 
"(B) the net value of investments and real estate, includ-
- 
ing the net value in the principal place of residence except 
in the case of a dislocated worker (certified in accordance 
29 use 1651. 
with title III of the Job Training Partnership Act) or a 
dislocated homemaker (as defined in section 480(e) of this 
. Act); and 
"(C) the adjusted net worth of a business or farm, com-
puted on the basis of the net worth of such business or farm 
(hereafter referred to as 'NW'), determined in accordance 
with the following table (or a successor table prescribed by 
•
;
)
E
i
- 
the Secretary under section 479): 
"Adjusted Net Worth of a Business or Farm 
If the net worth o^^business or farm 
^^^^^ ^^^^ ^^.^^^^ 
^^^ ^^^^j^ .g_ 
Less than $1 
$0 
, 
,
.
5 
$l-$65,000 
40 percent of NW 
*" 
' ' 
$65,001-3195,000 
$26,000 plus 50 percent of NW over 
$65,000 
$195,001-$325,000 
$91,000 plus 60 percent of NW over 
$195,000 
$325,001 or more 
$169,000 plus 100 percent of NW over 
$325,000 
•; -«?u iC 
"(3) ASSET PROTECTION ALLOWANCE.—The asset protection 
^^ allowance is calculated according to the following table: 
S«-
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1469 
"Asset Protection Allowances for Families and Students 
And there are 
If the age of the student is— 
two spouses 
one spouse 
then the asset protection 
allowance is— 
25 or less 
$0 
$0 
26 
1,900 
1,500 
27 
3,900 
3,000 
28 
5,800 
4,500 
29 
7,800 
6,100 
30 
9,700 
7,600 
31 
11,700 
9,100 
32 
13,600 
10,600 
33 
15,600 
12,100 
34 
17,500 
13,600 
35 
19,500 
15,100 
36 
21,400 
16,600 
37 
23,400 
18,200 
38 
25,300 
19,700 
39 
27,300 
21,200 
40 
29,200 
22,700 
41 
30,000 
23,200 
42 
30,800 
23,800 
43 
31,600 
24,200 
44 
32,500 
24,800 
45 
33,300 
25,400 
46 
34,200 
26,100 
47 
35,200 
26,700 
48 
36,100 
27,200 
»
• '.'-'J-i' 
49 
37,300 
27,900 
50 
38,300 
28,800 
51 
39,600 
29,500 
52 
40,900 
30,300 
53 
42,000 
31,000 
54 
43,400 
32,000 
55 
44,800 
32,800 
56 
46,300 
33,800 
57 
48,100 
34,600 
58 
49,700 
35,700 
>'^ 'Mmmi 
59 
51,600 
36,800 
60 
53,300 
37,900 
61 
55,300 
39,000 
62 
57,400 
40,200 
63 
59,600 
41,400 
64 
61,800 
42,600 
65 or more 
64,100 
44,100 
.
- 
"(4) ASSET CONVERSION RATE.—The asset conversion rate is 
determined as follows: 
"(A) if the family's net worth (determined in accordance 
f 
with paragraph (2)) minus the asset protection allowance 
(determined in accordance with paragraph (3)) is equal to or 
greater than zero, the conversion rate is 12 percent; 
"(B) if such family's net worth minus such asset protec-
tion allowance is less than zero and the family's available 
income (determined in accordance with subsection (c)) is 
greater than $15,000, the conversion rate is zero percent; 
"(C) if such family's net worth minus such asset protec-
tion allowance is less than zero and such family's available 
income is equal to or greater than zero but less than 
100 STAT. 1470 
PUBLIC LAW 99-498—OCT. 17, 1986 
$15,000, the conversion rate is equal to 6 percent multiplied 
by a fraction— 
"(i) the numerator of which is equal to $15,000 minus 
7 . 
such family's available income; and 
"(ii) the denominator of which is $15,000; and 
"(D) if such family's net worth minus such asset protec-
tion allowance is less than zero and such family's available 
income is less than zero, the conversion rate is 6 percent. 
"(d) ASSESSMENT SCHEDULE.—The adjusted available income (as 
determined under subsection (aXD and hereafter referred to as 
'AAI') is assessed according to the following table (or a successor 
table prescribed by the Secretary under section 479): 
"Assessment From Adjusted Available Income (AAI) 
If AAIis-
Then the assessment is-
Less than $3,409 
-$750 
$3,409 to $7,500 
22% of AAI 
$7,501 to $9,400 
$1,650 + 25% of AAI over $7,500 
$9,401 to $11,300 
$2,125 + 29% of AAI over $9,400 
$11,301 to $13,200 
$2,676 + 34% of AAI over $11,300 
$13,201 to $15,100 
$3,322 + 40% of AAI over $13,200 
$15,101 or more 
$4,082 + 47% of AAI over $15,100 
REGULATIONS; UPDATED TABLES 
20 u s e 1087rr. 
Regulations. 
Federal 
Register, 
publication. 
Federal 
Register, 
publication. 
"SEC. 
478. 
(a) 
AUTHORITY To 
PRESCRIBE 
REGULATIONS 
RE-
STRICTED.—(1) Notwithstanding any other provision of law, the Sec-
retary shall not have the authority to prescribe regulations to carry 
out this part except— 
"(A) to prescribe updated tables in accordance with subsec-
tions (h) through (e) of this section; or 
"(B) to propose modifications in the need analysis methodol-
ogy required by this part. 
"(2) Any regulation proposed by the Secretary that (A) updates 
tables in a manner that does not comply with subsections (b) 
through (e) of this section, or (B) that proposes modifications under 
paragraph (IXB) of this subsection, shall not be effective unless 
approved by joint resolution of the Congress by May 1 following the 
date such regulations are published in the Federal Register in 
accordance with section 482. If the Congress fails to approve such 
regulations by such May 1, the Secretary shall publish in the 
F^eral Register in accordance with section 482 updated tables for 
the applicable award year that are prescribed in accordance with 
subsections (b) through (e) of this section. 
"(b) STANDARD MAINTENANCE ALLOWANCE.—For each academic 
year after academic year 1987-1988, the Secretary shall publish in 
the Federal Register a revised table of standard maintenance allow-
ances for the purpose of sections 475(cX4) and 477(bX4). Such revised 
table shall be developed by increasing each of the dollar amounts 
contained in the table in each such section by a percenteige equal to 
the estimated percentage increase in the C!onsumer Price Index (as 
determined by the Secretary after consultation with the Advisory 
Committee on Student Financial Assistance) between December 
1986 and the December next preceding the beginning of such aca-
demic year, and rounding the result to the nearest $10. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1471 
"(c) ADJUSTED NET WORTH OF A FARM OR BUSINESS.—For each 
academic year after academic year 1987-1988, the Secretary shall 
publish in the Federal Register a revised table of adjusted net worth 
of a farm or business for the purpose of sections 475(d)(2)(C), 
476(c)(2)(C), and 477(c)(2)(C). Such revised table shall be developed— 
"(1) by increasing each dollar amount that refers to net worth 
of a farm or business by a percentage equal to the estimated 
percentage increase in the Consumer Price Index (as deter-
mined by the Secretary after consultation with the Advisory 
Committee on Student Financial Assistance) between 1986 and 
the December next preceding the beginning of such academic 
year, and rounding the result to the nearest $5,000; and 
"(2) by adjusting the dollar amounts '$26,000', '$91,000', 
and '$169,000' to reflect the changes made pursuant to para-
graph (1). 
"(d) ASSET PROTECTION ALLOWANCE.—For each academic year 
after academic year 1987-1988, the Secretary shall publish in the 
Federal Register a revised table of asset protection allowances for 
purposes of sections 475(d)(3), 476(c)(3), and 477(c)(3). Such revised 
table shall be developed by determining the present value cost of an 
annuity that would provide, for each age cohort, a supplemental 
income at age 65 (adjusted for inflation) equal to the difference 
between the moderate family income (as most recently determined 
by the Bureau of Labor Statistics) and the current average social 
security retirement benefits. In making such determinations— 
"(1) inflation shall be presumed to be 6 percent per year; 
"(2) the rate of return of an annuity shall be presumed to be 8 
percent; and 
"(3) the sales commission on an annuity shall be presumed to 
be 6 percent. 
"(e) ASSESSMENT SCHEDULES AND RATES.—(1) For each academic 
year after academic year 1987-1988, the Secretary shall publish in 
the Federal Register a revised table of assessments from adjusted 
available income for the purpose of sections 475(e) and 477(d). Such 
revised table shall be developed— 
"(A) by increasing each dollar amount that refers to adjusted 
available income by a percentage equal to the estimated 
percentage increase in the Consumer Price Index (as deter-
mined by the Secretary after consultation with the Advisory 
Committee on Student Financial Assistance) between December 
1986 and the December next preceding the beginning of such 
academic year, rounded to the nearest $100; and 
"(B) by adjusting the other dollar amounts to reflect the 
changes made pursuant to subparagraph (A). 
"(2) For each academic year after academic year 1987-1988, the 
assessments made pursuant to section 476(b)(4) shall be made— 
"(A) by increasing each dollar amount that refers to adjusted 
available income by a percentage equal to the estimated 
percentage increase in the Consumer Price Index (as deter-
mined by the Secretary after consultation with the Advisory 
Committee on Student Financial Assistance) between December 
1986 and the December next preceding the beginning of such 
academic year, rounded to the nearest $100; and 
"(B) by adjusting the other dollar amount to reflect the 
changes made pursuant to subparagraph (A). 
The Secretary shall publish in the Federal Register the adjustments 
required to carry out this paragraph. 
Federal 
Register, 
publication. 
Federal 
Register, 
publication. 
Federal 
Register, 
publication. 
Federal 
Register, 
publication. 
100 STAT. 1472 
PUBLIC LAW 99-498-OCT. 17,1986 
.^vk.cf 
"(f) DEFINITION OF CONSUMER PRICE INDEX.—As used in this sec-
tion, the term 'Consumer Price Index' means the Consumer Price 
•' 
Index for Wage Earners and Clerical Workers published by the 
Department of Labor, Each annual update of tables to reflect 
changes in the Consumer Price Index shall be corrected for 
misestimation of actual changes in such Index in previous years. 
"SIMPLIFIED NEEDS TEST 
20 use 1087SS. 
"SEC. 479. (a) APPUCABLE TO ALL TITLE IV PROGRAMS.—The Sec-
retary shall use a simplified needs analysis for any provision of this 
title based upon the elements set forth in paragraph (2) for the 
calculation of the expected family contribution for families which 
have adjusted gross incomes which are equal to or less than $15,000 
per year and which file a form 1040A pursuant to the Internal 
26 use 1 et seq. Revenue Code of 1954. 
"(b) ELEMENTS IN TESTS.—The five elements to be used for the 
i 
simplified needs analysis are— 
"(1) adjusted gross income, 
"(2) Federal and State taxes paid, 
"(3) untaxed income and benefits, 
"(4) the number of family members, and 
"(5) the number of family members in postsecondary edu-
cation. 
"DISCRETION OF STUDENT FINANCIAL AID ADMINISTRATORS 
20 use I087tt. 
"SEC. 479A. Nothing in this part shall be interpreted as limiting 
the ability of the student financial aid administrator, on the basis of 
adequate documentation, to make necessary adjustments to the cost 
of attendance and expected family contribution computations to 
allow for treatment of individual students with special cir-
cumstances. In addition, nothing in this part shall be interpreted as 
limiting the ability of the student financial aid administrator to use 
supplementary information about the financial status of eligible 
applicants in selecting recipients and determining the amount of 
awards under subparts 1 and 2 of part A and parte B, C, and E of 
this title. 
STUDENT ASSISTANCE AND OTHER FEDERAL PROGRAMS 
20 use 1087UU. 
"SEC. 479B. No portion of any student financial assistance re-
ceived by an individual from any program funded in whole or in 
part under title IV of this Act which is used by that individual for 
costs described in section 472 (1) and (2) of this title, shall be 
considered as income or resources in determining eligibility for 
assistance under any other program funded in whole or in part with 
Federal funds. 
"DEFINITIONS 
20 use lOSTw. 
"SEC. 480. As used in this part: 
"(a) TOTAL INCOME.—(1) Except as provided in paragraphs (2) and 
(3), the term 'total income' is equal to adjusted gross income plus 
untaxed income and benefite for the preceding tax year. 
Regulations. 
"(2) The Secretary shall promulgate special regulations to permit, 
in the computation of family contributions for the programs under 
subpart 2 of part A and parte B, C, and E of this title for any 
academic year the exclusion from family income of any proceeds of a 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1473 
sale of farm or business assets of that family if such sale results 
from a voluntary or involuntary foreclosure, forfeiture, liquidation, 
or bankruptcy. 
"(3) Income in the case of a dislocated worker shall be the income 
for the year for which the determination is made. For the purpose of 
this subparagraph, a dislocated worker is a worker identified pursu-
ant to title III of the Job Training Partnership Act. 
29 USC 1651. 
"(b) UNTAXED INCOME AND BENEFITS OF PARENTS AND INDEPEND-
ENT STUDENTS WITH DEPENDENTS.—The term 'untaxed income and 
benefits' when applied to parent contributions or the contributions 
of independent students with dependents (including spouses) 
means— 
. K- - -
"(1) the Federal income tax deduction for a married couple 
-
when both work; 
(2) child support received; 
"(3) welfare benefits, including aid to families with dependent 
children under a State plan approved under part A of title IV of 
the Social Security Act and aid to dependent children; 
42 USC 601. 
"(4) untaxed portions of unemployment compensation, except 
in any case in which a student is a dislocated worker certified in 
accordance with title III of the Job Training Partnership Act; 
"(5) workmen's compensation; 
"(6) veterans benefits such as death pension, dependency and 
indemnity compensation, and Veterans' Administration voca-
tional rehabilitation program benefits (excluding educational 
benefits); 
"(7) educational benefits received under chapter 31 or chapter 
34 of title 38, United States Code, by family members excluding 
38 USC 1500 et 
dependent students; 
seq., 1651 et seq. 
"(8) interest on tax-free bonds; 
"(9) the amount of dividends excluded for Federal income tax 
purposes; 
"(10) untaxed portions of pensions and capital gains; 
"(11) housing, food, and other living allowances (excluding 
rent subsidies for low-income housing) for military, clergy, and 
others (including cash payments and cash value of benefits); 
"(12) Job Training Partnership Act noneducational benefits; 
29 USC 1501 
"(13) payments to individual retirement accounts and Keogh 
note. 
accounts; 
"(14) the amount of earned income credit claimed for Federal 
income tax purposes; 
"(15) credit for Federal tax on special fuels; 
"(16) the amount of dividend reinvestment excluded for pur-
poses of Federal income taxes; 
"(17) the amount of foreign income excluded for purposes of 
Federal income taxes; 
"(18) untaxed social security benefits; and 
"(19) any other untaxed income and benefits, such as black 
lung or railroad retirement benefits. 
"(c) UNTAXED INCOME AND BENEFITS OF DEPENDENT STUDENTS OR 
INDEPENDENT STUDENTS WITHOUT DEPENDENTS,—For the purpose of 
this part, the term 'untaxed income and benefits' when applied to 
the contributions of dependent students or independent students 
without dependents means— 
"(1) veterans benefits such as death pension, dependency and 
indemnity compensation, and Veterans' Administration voca-
100 STAT. 1474 
PUBLIC LAW 99-498—OCT. 17, 1986 
tional rehabilitation program benefits (excluding educational 
benefits); 
"(2) educational benefits received under chapter 31 or chapter 
38 use 1500 et 
34 of title 38, United States Code, by the student; 
seq., 1651 et seq. 
"(3) interest on tax-free bonds; 
"(4) the amount of dividends excluded for purposes of Federal 
income taxes; 
"(5) untaxed portions of pensions and capital gains; 
"(6) housing, food, and other living allowances (excluding rent 
subsidies for low-income housing) for military, clergy, and 
others (including cash payments and cash value of benefits); 
29 use 1501 
"(7) Job Training Partnership Act noneducational benefits, 
note. 
except in any case in which a student is a dislocated worker 
certified in accordance with title III of the Job Training Part-
29 use 1651. 
nership Act; 
"(8) untaxed portions of social security; 
"(9) welfare benefits; 
! ^ 
^ 
"(lO)untaxedportionsof unemployment compensation; 
"(11) workmen's compensation; 
"(12) payments to individual retirement accounts and Keogh 
accounts; 
"(13) credit for Federal tax on special fuels; 
"(14) the amount of dividend reinvestment excluded for pur-
poses of Federal income taxes; 
"(15) the amount of foreign income excluded for purposes of 
Federal income taxes; and 
"(16) any other untaxed income and benefits, such as black 
lung or railroad retirement benefits. 
"(d) INDEPENDENT STUDENT.—(1) The term 'independent', when 
used with respect to a student, means any individual who— 
"(A) is 24 years of age or older by December 31 of the award 
year; or 
"(B) meets the requirements of paragraph (2). 
"(2) Except as provided in paragraph (3), an individual meets the 
requirements of this paragraph if such individual— 
"(A) is an orphan or ward of the court; 
, 
"(B) is a veteran of the Armed Forces of the United States; 
•, . 
"(C) is a graduate or professional student who declares that he 
or she will not be claimed as a dependent for income tax 
purposes by his or her parents (or guardian) for the first cal-
endar year of the award year; 
"(D) is a married individual who declares that he or she will 
not be claimed as a dependent for income tax purposes by his or 
her parents (or guardian) for the first calendar year of the 
award year; 
"(E) has legal dependents other than a spouse; 
"(F) is a single undergraduate student with no dependents 
who was not claimed as a dependent by his or her parents (or 
guardian) for income tax purposes for the 2 calendar years 
preceding the award year and demonstrates to the student 
financial aid administrator total self-sufficiency during the 2 
calendar years preceding the award year in which the initial 
award will be granted by demonstrating an annual total income 
of $4,000; or 
"(G) is a student for whom a financial aid administrator 
makes a documented determination of independence by reason 
of other unusual circumstances. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1475 
"(3) An individual may not be treated as an independent student 
pursuant to subparagraphs (C), (D), and (F) of paragraph (2) if the 
financial aid administrator determines that such individual was 
treated as an independent student during the preceding award year, 
but was claimed as a dependent by any other individual (other than 
a spouse) for income tax purposes for the first calendar year of such 
award year. 
"(4) The financial aid administrator may certify an individual 
described in subparagraph (C), (D), or (F) of paragraph (2) on the 
basis of a demonstration made by the individual, but no disbursal of 
an award may be made without documentation, 
"(e) DISPLACED HOMEMAKER.—The term 'displaced homemaker' 
means an individual who— 
"(1) has not worked in the labor force for a substantial 
number of years but has, during those years, worked in the 
home providing unpaid services for family members; 
"(2) (A) has been dependent on public assistance or on the 
income of another family member but is no longer supported by 
that income, or (B) is receiving public assistance on account of 
dependent children in the home; and 
"(3) is unemployed or underemployed and is experiencing 
difficulty in obtaining or upgrading employment.", 
(b) EFFECTIVE DATES FOR NEED ANALYSIS PROVISIONS,—(1) Except 
as provided in paragraphs (2) and (3)— 
(A) part F of title IV of the Act shall apply with respect to 
determinations of need under such title for academic years 
beginning with academic year 1988-1989 and succeeding aca-
demic years; and 
(B) for any preceding academic year, determinations of need 
shall be made in accordance with regulations prescribed by the 
Secretary of Education in accordance with the Student Finan-
cial Assistance Technical Amendments Act of 1982, 
(2) With respect to an application filed after the date of enactment 
of this Act for a loan under part B of such title for any academic 
year preceding academic year 1988-1989, any determination of ex-
pected family contribution shall be made using the system of finan-
cial need analysis approved by the Secretary of Education for use 
under subpart 2 of part A and parts C and E of such title, 
(3) For purposes of sections 413D(dX2XB), 442(dX2XB) and 
462(dX2XB) for any academic year preceding academic year 1988-
1989, the Secretary shall, in lieu of average expected family con-
tribution, use the procedures for sampling expected family contribu-
tion within income categories that was employed for academic year 
1986-1987, adjusted to reflect changes in data, 
(4) The definition of independent student contained in section 
480(d) of the Act as amended by subsection (a) of this section shall 
apply with respect to the determination of such need for periods of 
enrollment beginning on or after January 1, 1987, in the case of 
programs operated under part B of title IV of the Act, or for periods 
of enrollment beginning on or after July 1, 1987, in the case of 
programs operated under subpart 2 of part A and parts C and E of 
such title. 
20 use 1087kk 
note. 
20 u s e 1001 
note. 
20 use 1087w 
note. 
SEC, 407. REVISION OF STUDENT ASSISTANCE GENERAL PROVISIONS, 
(a) AMENDMENT.—Part G of title IV of the Act (as redesignated by 
section 406) is amended to read as follows: 
100 STAT. 1476 
PUBLIC LAW 99-498—OCT. 17, 1986 
"PART G—GENERAL PROVISIONS RELATING TO STUDENT ASSISTANCE 
PROGRAMS 
"DEFINITIONS 
20 use 1088. 
"SEC. 481. (a) INSTITUTION OF HIGHER EDUCATION.—(1) For 
the 
purpose of this title, except subpart 6 of part A and part B, the term 
'institution of higher education' includes, in addition to the institu-
tions covered by the definition contained in section 1201(a)— 
"(A) a proprietary institution of higher education; . 
^ 
"(B) a postsecondary vocational institution; 
"(C) a department, division, or other administrative unit in a 
college or university which provides primarily or exclusively an 
accredited program of education in professional nursing and 
allied subjects leading to the degree of bachelor of nursing, or to 
an equivalent degree, or to a graduate degree in nursing; and 
"(D) a department, division, or other administrative unit in a 
junior college, community college, college, or university which 
provides primarily or exclusively an accredited 2-year program 
of education in professional nursing and allied subjects leading 
to an associate degree in nursing or to an equivalent degree. 
"(2) The term 'accredited' when applied to any program of nurse 
, 
^ ^^ 
education means a program accredited by a recognized body or 
^'' ' 
bodies approved for such purpose by the Secretary. 
"(b) PROPRIETARY INSTITUTION OF HIGHER EDUCATION.—For 
the 
purpose of this section, the term 'proprietary institution of higher 
education' means a school (1) which provides not less than a 6-month 
program of training to prepare students for gainful employment in a 
recognized occupation, (2) which meets the requirements of clauses 
(1) and (2) of section 1201(a), (3) which does not meet the requirement 
of clause (4) of section 1201(a), (4) which is accredited by a nationally 
recognized accrediting agency or association approved by the Sec-
' ' 
retary for this purpose, and (5) which has been in existence for at 
least 2 years. Such term also includes a proprietary educational 
institution in any State which, in lieu of the requirement in clause 
(1) of section 1201(a), admits as regular students persons who are 
beyond the age of compulsory school attendance in the State in 
which the institution is located and who have the ability to benefit 
(as determined by the institution under section 484(d)) from the 
training offered by the institution. For the purpose of this subsec-
tion, the Secretary shall publish a list of nationally recognized 
accrediting agencies or associations which he determines to be 
reliable authority as to the quality of training offered. The Secretary 
shall not promulgate regulations defining the admissions procedures 
or remediation programs that must be used by an institution in 
.. 
admitting students on the basis of their ability to benefit from the 
training offered and shall not, as a condition of recognition under 
section 413(e) of this Act, impose upon any accrediting body or 
bodies standards which are different or more restrictive than the 
standards provided in this subsection. 
"(c) POSTSECONDARY VOCATIONAL INSTITUTION.—For the purpose of 
this section, the term 'postsecondary vocational institution' means a 
school (1) which provides not less than a 6-month program of 
training to prepare students for gainful employment in a recognized 
occupation, (2) which meets the requirements of clauses (1), (2), (4), 
and (5) of section 1201(a), and (3) which has been in existence for at 
least 2 years. Such term also includes an educational institution in 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1477 
any State which, in lieu of the requirement in clause (1) of section 
1201(a), admits as regular students persons who are beyond the age 
of compulsory school attendance in the State in which the institu-
tion is located and who have the ability to benefit (as determined by 
the institution under subsection (d) of this section) from the training 
offered by the institution. 
"(d) ACADEMIC YEAR.—For the purpose of any program under this 
title, the term 'academic year' shall be defined by the Secretary by 
regulation. 
"MASTER CALENDAR 
"SEC. 482. (a) SECRETARY REQUIRED TO COMPLY WITH SCHEDULE.— 
To assure adequate notification and timely delivery of student aid 
funds under this title, the Secretary shall adhere to the following 
calendar dates in the year preceding the award year: 
"(1) Development and distribution of Federal and multiple 
data entry forms— 
"(A) by February 1: first meeting of the technical commit-
tee on forms design of the Department; 
"(B) by March 1: proposed modifications and updates 
pursuant to sections 41 IE and 478 published in the Federal 
Register; 
> .1 
"(C) by June 1: final modifications and updates pursuant 
to sections 41 IE and 478 published in the Federal Register; 
"(D) by August 15: application for Federal student assist-
ance and multiple data entry data elements and instruc-
tions approved; 
"(E) by August 30: final approved forms delivered to 
servicers and printers; 
"(F) by October 1: Federal £ind multiple data entry forms 
and instructions printed; and 
"(G) by November 1: Federal and multiple data entry 
forms, instructions, and training materials distributed. 
"(2) Allocations of campus-based and Pell Grant funds— 
"(A) by August 1: distribution of institutional application 
for campus-based funds (FISAP) to institutions; 
"(B) by October 1: final date for submission of FISAP by 
institutions to the Department; 
"(C) by November 15: edited FISAP and computer print-
out received by institutions; 
"(D) by December 1: appeals procedures received by 
t 
institutions; 
"(E) by December 15: edits returned by institutions to the 
Department; 
"(F) by February 1: tentative award levels received by 
institutions and finsd Pell Grant pa3mient schedule; 
"(G) by February 15: closing date for receipt of institu-
g , 
tional appeals by the Department; 
"(H) by March 1: appeals process completed; 
"(I) by April 1: final award notifications sent to institu-
tions; and 
j = .. ,. 
"(J) by June 1: Pell Grant authorization levels sent to 
institutions. 
"(b) TIMING FOR REALLOCATIONS.—With respect to any funds re-
allocated under section 413D(e) or 442(e), the Secretary shall reallo-
cate such funds at any time during the course of the year that will 
best meet the purpose of the programs under subpart 2 of part A 
20 use 1089. 
Federal 
Register, 
publication. 
Federal 
Register, 
publication. 
100 STAT. 1478 
PUBLIC LAW 99-498—OCT. 17, 1986 
Reports. 
and part C, respectively. However, such reallocation shall occur at 
least once each year, not later than September 30 of that year. 
"(c) DELAY OF EFFECTIVE DATE OF LATE PUBLICATIONS.—Any addi-
tional regulatory changes initiated by the Secretary affecting the 
general administration of the programs pursuant to this title that 
have not been published in final form by December 1 prior to the 
start of the award year shall not become effective until the begin-
ning of the second award year after the December 1 date. 
"(d) NOTICE TO CONGRESS.—The Secretary shall notify the Commit-
tee on Labor and Human Resources of the Senate and the Commit-
tee on Education and Labor of the House of Representatives when 
the items specified in the calendar have been completed and provide 
all relevant forms, rules, and instructions with such notice. When a 
deadline included in the calendar is not met, the Secretary, within 7 
days, shall submit to the Committee on Labor and Human Resources 
of the Senate and the Committee on Education and Labor of the 
House of Representatives a written report, including proper docu-
mentation, as to why the deadline was not adhered to and a detailed 
plan for ensuring that subsequent dates are met. Nothing in this 
section shall be interpreted to penalize institutions or deny them the 
specified times allotted to enable them to return information to the 
Secretary based on the failure of the Secretary to adhere to the dates 
specified in this section. 
FORMS AND REGULATIONS 
t 
C ^ ^ . 
20 use 1090. 
"SEC. 483. (a) COMMON FINANCIAL AID FORM AND PROCESSING.—(1) 
The Secretary, in cooperation with representatives of agencies and 
organizations involved in student financial assistance, shall pre-
scribe a common financial reporting form to be used to determine 
the need and eligibility of a student for financial assistance under 
parts A, C, and E of this title (other than under subpart 3 of part A) 
and to determine the need of a student for the purpose of part B of 
this title. For the purpose of collecting eligibility and other data for 
the purpose of part B, guaranty agencies, in cooperation with the 
Secretary, shall develop separate, identifiable loan application docu-
ments that applicants shall submit directly to eligible lenders. No 
student or parent of a student shall be charged a fee for processing 
the form prescribed by the Secretary whether the student completes 
that form or any other approved form. A student or parent may be 
charged a fee for processing an institutional or a State financial aid 
form or data elements that is not required by the Secretary. 
"(2) The Secretary shall, to the extent practicable, enter into not 
less than 3 contracts with States, institutions of higher education, or 
private organizations for the purpose of processing the application 
required under this subsection and issuing eligibility reports. 
"(3) The Secretary shall reimburse all approved contractors at a 
reasonable predetermined rate for processing such applications, for 
issuing eligibility reports, and for carrying out other services or 
requirements that may be prescribed by the Secretary. 
"(4) All approved contractors shall be required to adhere to all 
editing, processing, and reporting requirements established by the 
Secretary to ensure consistency. 
State and local 
"(5) Nothing in this section shall prohibit States, institutions of 
governments. 
higher education, or private organizations from simultaneously 
collecting data elements, in addition to the data elements prescribed 
State and local 
governments. 
Contracts. 
State and local 
governments. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1479 
Contracts. 
State and local 
governments. 
by the Secretary, as may be necessary to determine the eligibility of 
a student for financial aid funds not covered by this title. 
"(b) INFORMATION TO COMMITTEES OF CONGRESS.—Copies of all 
rules, regulations, guidelines, instructions, and application forms 
published or promulgated pursuant to this title shall be provided to 
the Committee on Labor and Human Resources of the Senate and 
the Committee on Education and Labor of the House of Representa-
tives at least 45 days prior to their effective date. 
"(c) INFORMATION ON EUGIBIUTY FOR ASSISTANCE.—To help ensure 
access to postsecondary education by providing early notice to stu-
dents of their potential eligibility for financial aid, the Secretary is 
authorized to enter into contracts with States, institutions of higher 
education, and private organizations for the purpose of— 
"(1) developing a common pre-eligibility Federal financial aid 
form, 
"(2) distributing and processing such form on a year-round 
basis free of charge to students, and 
"(3) issuing, on the basis of information reported by the 
student on such form, a pre-eligibility index designed to esti-
mate the amount of Federal (and, if feasible, non-Federal) funds 
for which the student might qualify in later completing and 
submitting the application form called for under this section. 
The Secretary shall widely disseminate the pre-eligibility form 
through post offices and other appropriate Federal installations, 
schools, postsecondary institutions, libraries, and community-based 
agencies, including projects assisted under subparts 4 and 5 of part 
A of this title. 
"(d) TOLL-FREE INFORMATION.—The Secretary shall contract for, or Contracts 
establish, and publicize a toll-free telephone number to provide 
timely and accurate information to the general public. The informa-
tion provided shall include specific instructions on completing ap-
plication forms for assistance under this title. 
"(e) NOTICE OF STUDENT AID RECEIPT.—(1) The Secretary shall 
develop a single form on which the amount of assistance received 
under this title (except assistance received under subparts 4, 5, and 7 
of part A) by each student who receives such assistance can be 
recorded. This form shall be titled 'United States Department of 
Education, Federal Student Assistance Report'. Such form shall 
have prominently displayed the Great Seal of the United States. 
Such form shall be the same or a closely similar color to that of 
checks issued by the Tresisury Department and be provided by the 
Secretary free to eligible institutions in sufficient quantity and in a 
timely manner so that each eligible institution can provide a com-
pleted copy to each recipient of assistance under this title (except 
assistance received under subparts 4, 5, and 7 of part A) at the time 
awards are made but not less than once annually. 
"(2) Eligible institutions shall provide to each recipient of assist-
ance under this title (except assistance received under subparts 4, 5, 
and 7 of part A) a completed copy of the 'United States Department 
of Education, Federal Student Assistance Report' form at the time 
awards are made but not less than once annually. 
STUDENT EUGIBIUTY 
"SEC. 484. (a) IN GENERAL.—In order to receive any grant, loan, or 
work assistance under this title, a student must— 
Grants. 
20 use 1091. 
100 STAT. 1480 
PUBLIC LAW 99-498—OCT. 17,1986 
Trust Territory 
of the Pacific 
Islands. 
Guam. 
Northern 
Mariana Islands. 
< s
, "(1) be enrolled or accepted for enrollment in a degree, certifi-
cate, or other program leading to a recognized educational 
credential at an institution of higher education that is an 
eligible institution in accordance with the provisions of section 
487; 
"(2) if the student is presently enrolled at an institution, be 
maintaining satisfactory progress in the course of study the 
student is pursuing in accordance with the provisions of subsec-
tion (c); 
"(3) not owe a refund on grants previously received at any 
institution under this title, or be in default on any loan from a 
student loan fund at any institution provided for in part E, or a 
loan made, insured, or guaranteed by the Secretary under this 
title for attendance at any institution; 
"(4) file with the institution of higher education which the 
student intends to attend, or is attending (or in the case of a 
loan or loan guarantee with the lender), a statement of edu-
cational purpose (which need not be notarized but which shall 
include such student's social security number or, if the student 
does not have a social security number, such student's student 
identification number) stating that the money attributable to 
such grant, loan, or loan guarantee will be used solely for 
expenses related to attendance or continued attendance at such 
institution; and 
"(5) be a citizen or national of the United States, a permanent 
resident of the United States, in the United States for other 
than a temporary purpose and able to provide evidence from the 
Immigration and Naturalization Service of his or her intent to 
become a permanent resident, or a permanent resident of the 
Trust Territory of the Pacific Islands, Guam, or the Northern 
Mariana Islands. 
"(b) EuGiBiuTY FOR STUDENT LOANS.—In order to be eligible to 
receive any loan under this title (other than a loan under section 
428A, 428B, or 428C) for any period of enrollment, a student who is 
not a graduate or professional student (as defined in regulations of 
the Secretary), £ind who is enrolled in a program at an institution 
which has a participation agreement with the Secretary to make 
awards under subpart 1 of part A of this title, shall— 
"(1) have received a determination of eligibility or ineligibility 
for a grant under such subpart 1 for such period of enrollment; 
or 
"(2) have (A) filed an application with the Pell Grant proc-
essor for such institution for such enrollment period, and (B) 
received from the financial aid administrator of the institution 
a preliminary determination of the student's eligibility or ineli-
gibility for a grant under such subpart 1. 
"(c) SATISFACTORY PROGRESS.—(1) For the purpose of subsection 
(aX2), a student is maintaining satisfactory progress if— 
"(A) the institution at which the student is in attendance, 
reviews the progress of the student at the end of each academic 
year, or its equivalent, as determined by the institution, and 
"(B) the student has a cumulative C average, or its equivalent 
or academic standing consistent with the requirements for 
graduation, as determined by the institution, at the end of the 
second such academic year. 
"(2) Whenever a student fails to meet the eligibility requirements 
of subsection (aX2) as a result of the application of this subsection 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1481 
and subsequent to that failure the student has academic standing 
consistent with the requirements for graduation, as determined by 
the institution, for any grading period, the student may, subject to 
this subsection, again be eligible under subsection (a)(2) for a grant, 
loan, or work assistance under this title. 
"(3) Any institution of higher education at which the student is in 
attendance may waive the provisions of paragraph (1) or paragraph 
(2) of this subsection for undue hardship based on— 
"(A) the death of a relative of the student, 
"(B) the personal injury or illness of the student, or 
"(C) special circumstances as determined by the institution. 
"(d) ABILITY TO BENEFIT.—A student who is admitted on the basis 
of the ability to benefit from the education or training in order to 
remain eligible for any grant, loan, or work assistance under this 
title shall— 
"(1) receive the general education diploma prior to the stu-
dent's certification or graduation from the program of study, or 
by the end of the first year of the course of study, whichever is 
earlier; or 
"(2)(A) be counseled prior to admissions or be administered a 
nationally recognized standardized or industry developed test, 
subject to criteria developed by the appropriate accrediting 
association, measuring the applicant's aptitude to complete 
successfully the program to which he has applied; and 
"(B) with respect to applicants who are unable to satisfy the 
institution's admissions testing requirements specified 
in 
subparagraph (A), be enrolled in an institutionally prescribed 
program or course of remedial or developmental education, not 
to exceed one academic year or its equivalent. 
"(e) CERTIFICATION FOR G S L EUGIBILITY.—Each eligible institution 
may certify student eligibility for a loan by an eligible lender under 
part B of this title prior to completing the review for accuracy of the 
information submitted by the applicant required by regulations 
issued under this title, if— 
"(1) checks for the loans are mailed to the eligible institution 
prior to disbursements; 
"(2) the disbursement is not made until the review is com-
plete; and 
"(3) the eligible institution has no evidence or documentation 
on which the institution may base a determination that the 
information submitted by the applicant is incorrect. 
"(f) 
VERIFICATION 
LIMITATIONS.—Notwithstanding any 
other 
provision of law, the Secretary may not require, or prescribe regula-
tions that require, institutions to verify the accuracy of data used to 
determine the eligibility for any program under this title for more 
than 30 percent of the applicants in any award year. 
"(g) Loss OF EUGIBIUTY FOR VIOLATION OF LOAN LiMITS.—No 
student shall be eligible to receive any grant, loan, or work assist-
ance under this title if the eligible institution determines that the 
student borrowed in violation of the annual loan limits under part B 
or part E of this title in the same academic year, or if the student 
borrowed in excess of the aggregate maximum loan limits under 
such part B or part E. 
:
^ ; os 
100 STAT. 1482 
PUBLIC LAW 99-498—OCT. 17,1986 
•' 
y 
"STATUTE OF UMITATIONS 
' ' 
:'^ 
^ 
^ " 
State and local 
"SEC. 484A, (a) IN GENERAL.—Notwithstanding any provision of 
fnTrop^mQ?" 
State law that would set an earlier deadline for filing suit— 
^0 Ubc 1091a. 
it^i^ ^jj institution which receives funds under this title may 
file suit for collection of a refund due from a student on a grant 
made or work assistance awarded under this title during a 
period of time extending at least until a date 6 years (exclusive 
of periods during which the State statute of limitations period 
otherwise applicable to the suit would be tolled under State law) 
after the date the refund first became due; 
"(2) a guaranty agency which has an agreement with the 
Secretary under section 428(c) may file suit for collection of the 
amount due from a borrower on a loan made under part B of 
this title during a period of time extending at least until a date 
6 years (exclusive of periods during which the State statute of 
limitations period otherwise applicable to the suit would be 
tolled under State law) after the date such guaranty agency 
reimburses the previous holder of the loan for its loss on 
account of the default of the borrower; 
"(3) an institution which has an agreement with the Secretary 
pursuant to section 463(a) may file suit for collection of the 
amount due from a borrower on a loan made under part E of 
this title during a period of time extending at least until a date 
6 years (exclusive of periods during which the State statute of 
limitations period otherwise applicable to the suit would be 
tolled under State law) after the date of the default of the 
borrower with respect to that amount; and 
"(4) subject to the provisions of section 2416 of title 28 of the 
United States Code, the Attorney General may file suit— 
"(A) for pajnnent of a refund due from a student on a 
grant made under this title until 6 years following the date 
on which the refund first became due; 
"(B) for collection of the amount due the Secretary from a 
borrower pursuant to section 428 (cX2XD) and (cX8) of this 
T
i ; 1 
title until 6 years following the date on which the loan is 
assigned to the Secretary under part B of this title; and 
ICC 
"(C) for collection of the amount due from a borrower on 
a loan made under part E until 6 years following the date 
on which the loan is assigned, transferred, or referred to 
the Secretary under part E of this title. 
"(b) ASSESSMENT OF COSTS AND OTHER CHARGES.—Notwithstanding 
any provision of State law to the contrary— 
"(1) a borrower who has defaulted on a loan made under this 
title shall be required to pay, in addition to other charges 
specified in this title, reasonable collection costs; and 
"(2) in collecting any obligation arising from a loan made 
under part B of this title, a guaranty agency or the Secretary 
shall not be subject to a defense raised by any borrower based 
on a claim of infancy. 
"INSTITUTIONAL AND FINANCIAL ASSISTANCE INFORMATION FOR 
STUDENTS 
20 use 1092. 
"SEC. 485. (a) INFORMATION DISSEMINATION ACTIVITIES.—(1) Each 
eligible institution participating in any program under this title 
shall carry out information dissemination activities for prospective 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1483 
and enrolled students (including those attending or planning to 
attend less than full time) regarding the institution and all financial 
assistance under this title. The information required by this section 
shall be produced and be made readily available, through appro-
priate publications and mailings, to all current students, and to any 
prospective student upon request. The information required by this 
section shall accurately describe— 
"(A) the student financial assistance programs available to 
students who enroll at such institution; 
"(B) the methods by which such assistance is distributed 
among student recipients who enroll at such institution; 
"(C) any means, including forms, by which application for 
student financial assistance is made and requirements for 
accurately preparing such application; 
"(D) the rights and responsibilities of students receiving 
financial assistance under this title; 
"(E) the cost of attending the institution, including (i) tuition 
^ 
and fees, (ii) books and supplies, (iii) estimates of t3T)ical student 
' 
room and board costs or typical commuting costs, and (iv) any 
\ 
additional cost of the program in which the student is enrolled 
{ 
or expresses a specific interest; 
"(F) a statement of the refund policy of the institution for the 
return of unearned tuition and fees or other refundable portion 
of cost, as described in subparagraph (E) of this paragraph; 
I 
"(G) the academic program of the institution, including (i) the 
current degree programs and other educational and training 
programs, (ii) the instructional, laboratory, and other physical 
plant facilities which relate to the academic program, and (iii) 
, 
the faculty and other instructional personnel; 
i 
"(H) each person designated under subsection (c) of this sec-
tion, and the methods by which and locations in which any 
[; 
person so designated may be contacted by students and prospec-
tive students who are seeking information required by this 
. 
subsection; 
"(I) special facilities and services available to handicapped 
1 
students; 
u 
"(J) the names of associations, agencies, or governmental 
bodies which accredit, approve, or license the institution and its 
programs, and the procedures under which any current or 
prospective student may obtain or review upon request a copy of 
•i 
the documents describing the institution's 
accreditation, 
<•. ; 
j O
' 
approval, or licensing; and 
"(K) the standards which the student must maintain in order 
to be considered to be making satisfactory progress, pursuant to 
Jt-
section 484(a)(2). 
"(2) For the purpose of this section, the term 'prospective student' 
means any individual who has contacted an eligible institution 
requesting information concerning admission to that institution. 
"(b) EXIT COUNSEUNG FOR BORROWERS.—Each eligible institution 
shall, through financial aid officers or otherwise, make available 
counseling to borrowers (individually or in groups) of loans which 
are made, insured, or guaranteed under part B of this title or made 
under part E of this title prior to the completion of the course of 
study for which the borrower enrolled at the institution or at the 
time of departure from such institution. The counseling required by 
this subsection shall include— 
100 STAT. 1484 
PUBLIC LAW 99-498—OCT. 17,1986 
"(1) general information with respect to the average indebted-
ness of students who have loans under part B or part E; and 
"(2) the average anticipated monthly repa5ntnents, a review of 
the repayment options available, together with such debt and 
management strategies as the institution determines are de-
signed to facilitate the repajnnent of such indebtedness. 
In the case of a borrower who leaves an institution without the prior 
knowledge of the institution, the institution shall attempt to provide 
the information to the student in writing. 
"(c) FINANCIAL ASSISTANCE INFORMATION PERSONNEL.—Each eli-
gible institution shall designate an employee or group of employees 
who shall be available on a full-time basis to assist students or 
potential students in obtaining information as specified in subsec-
tion (a). The Secretary may, by regulation, waive the requirement 
that an employee or employees be available on a full-time basis for 
carr3dng out responsibilities required under this section whenever 
an institution in which the total enrollment, or the portion of the 
enrollment participating in programs under this title at that institu-
tion, is too small to necessitate such employee or employees being 
available on a full-time basis. No such waiver may include permis-
sion to exempt any such institution from designating a specific 
individual or a group of individuals to carry out the provisions of 
this section. 
"(d) DEPARTMENTAL PUBLICATION OF DESCRIPTIONS OF ASSISTANCE 
PROGRAMS.—The Secretary shall make available to eligible institu-
tions, eligible lenders, and secondary schools descriptions of Federal 
student assistance programs including the rights and responsibil-
ities of student and institutional participants, in order to (1) assist 
students in gaining information through institutional sources, and 
(2) assist institutions in carrying out the provisions of this section, so 
that individual and institutional participants will be fully aware of 
their rights and responsibilities under such programs. In particular, 
such information shall include information to enable students and 
prospective students to assess the debt burden and monthly and 
total repajnnent obligations that will be incurred as a result of 
receiving loans of varjdng amounts under this title. Such informa-
tion shall be provided by eligible institutions and eligible lenders at 
any time that information regarding loan availability is provided to 
any student. 
"COMBINED PAYMENT PLAN 
20 use 1092a. 
"SEC. 485A. (a) EuGiBiLiTY FOR PLAN.—Upon the request of the 
borrower, a lender described in clause (i), (ii), or (iii) of section 
428C(aXl) of this Act, or defined in subpart I of part C of title VII of 
42 use 294. 
the Public Health Service Act may, with respect to a consolidation 
loan made under section 428C of this Act (and section 439(o) of this 
Act as in effect prior to the enactment of section 4280) and loans 
guaranteed under subpart I of part C of title VII of the Public 
Health Service Act (known as Health Education Assistance Loans), 
offer a combined payment plan under which the lender shall submit 
one bill to the borrower for the repayment of all such loans for the 
monthly or other similar period of repayment. 
"(b) APPUCABIUTY OF OTHER REQUIREMENTS.—A lender offering a 
combined payment plan shall comply with all provisions of section 
428C applicable to loans consolidated or to be consolidated and shall 
comply with all provisions of subpart I of part C of title VII of the 
Public Health Service Act applicable to loans under that subpart 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1485 
which are made part of the combined payment plan, except that a 
lender offering a combined payment plan under this section may 
offer consolidation loans pursuant to section 428C(b)(l)(A) if such 
lender holds any outstanding loan of a borrower which is selected 
for inclusion in a combined payment plan. 
"(c) LENDER EUGIBIUTY.—Such lender may offer a combined pay-
ment plan only if— 
. H
: .-
"(1) the lender holds an outstanding loan of that borrower 
which is selected by the borrower for incorporation into a 
; 
combined payment plan pursuant to this section (including 
loans which are selected by the borrower for consolidation 
' "
^ - 
-t 
under this section); or 
r 
"(2) the borrower certifies that the borrower has sought and 
has been unable to obtain a combined payment plan from the 
holders of the outstanding loans of that borrower. 
"(d) BORROWER SELECTION OF COMPETING OFFERS.—In the case of 
multiple offers by lenders to administer a combined payment plan 
for a borrower, the borrower shall select from among them the 
lender to administer the combined payment plan including its loan 
consolidation component. 
"(e) EFFECT OF PLAN.—Upon selection of a lender to administer 
the combined payment plan, the lender may reissue any Health 
Education Assistance Loan selected by the borrower for incorpora-
tion in the combined payment plan which is not held by such lender 
and the proceeds of such reissued loan shall be paid by the lender to 
the holder or holders of the loans so selected to discharge the 
liability on such loans, i
f
— 
"(1) the lender selected to administer the combined payment 
plan has determined to its satisfaction, in accordance with 
reasonable and prudent business practices, for each loan being 
.^^ 
^' 
reissued (A) that the loan is a legal, valid, and binding obliga- 
^ 
tion of the borrower; (B) that each such loan was made and 
serviced in compliance with applicable laws and regulations; 
;,t 
and (C) the insurance on such loan is in full force and effect; and 
"(2) the loan being reissued w£is not in default (as defined in 
section 733(eX3) of the Public Health Service Act) at the time 
42 USC 294f. 
the request for a combined payment plan is made. 
"(f) NOTES AND INSURANCE CERTIFICATES.—(1) Each loan reissued 
under subsection (e) shall be evidenced by a note executed by the 
borrower. The Secretary of Health and Human Services shall insure 
such loan under a certificate of comprehensive insurance with no 
insurance limit, but any such certificate shall only be issued to an 
authorized holder of loans insured under subpart I of part C of title 
VII of the Public Health Service Act (including the Student Loan 
42 USC 294. 
Marketing Association). Such certificates shall provide that all loans 
reissued under this section shall be fully insured against loss of 
principal and interest. Any insurance issued with respect to loans 
reissued under this section shall be excluded from the limitation on 
maximum insurance authority set forth in section 728(a) of the 
Public Health Service Act. Notwithstanding the provisions of sec- 42 USC 294a. 
tion 729(a) of the Public Health Service Act, the reissued loan shall 
42 USC 294b. 
be made in an amount, including outstanding principal, capitalized 
interest, accrued unpaid interest not yet capitalized, and authorized 
late charges. The proceeds of each such loan will be paid by the 
lender to the holder of the original loan being reissued and the 
borrower's obligation to that holder on that loan shall be discharged. 
100 STAT. 1486 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(2) Except as otherwise specifically provided for under the provi-
sions of this section, the terms of any reissued loan shall be the same 
as the terms of the original loan. The maximum repayment period 
for a loan reissued under this section shall not exceed the remainder 
of the period which would have been permitted on the original loan. 
If the lender holds more than one loan insured under subpart I of 
42 use 294. 
part C of title VII of the Public Health Service Act, the maximum 
repayment period for all such loans may extend to the latest date 
permitted for any individual loan. Any reissued loan may be consoli-
dated with any other Health Education Assistance Loan as provided 
42 use 201 note, in the Public Health Service Act, and, with the concurrence of the 
borrower, repayment of any such loans during any period may be 
made in amounts that are less than the interest that accrues on 
such loans during that period. 
"(g) TERMINATION OF BORROWER ELIGIBIUTY.—The status of an 
individual as an eligible combined payment plan borrower termi-
nates upon receipt of a combined payment plan. 
"(h) FEES AND PREMIUMS.—No origination fee or insurance pre-
mium shall be charged to the borrower on any combined payment 
plan, and no origination fee or insurance premium shall be payable 
by the lender to the Secretary of Health and Human Services. 
"(i) COMMENCEMENT OF REPAYMENT.—Repa3rment of a combined 
payment plan shall commence within 60 days after the later of the 
date of acceptance of the lender's offer to administer a combined 
payment plan, the making of the consolidation loan or the 
reissuance of any Health Education Assistance Loans pursuant to 
subsection (e). 
. 
. ^ 
i: i- 
. ^«i^ 
"NATIONAL STUDENT LOAN DATA SYSTEM 
20 use 1092b. 
"SEC. 485B. (a) AUTHORITY OF THE SECRETARY.^—In order to assure 
improved and accurate information on student loan indebtedness 
and institutional lending practices, and to insure improved compli-
ance with the repa)mient and loan limitation provisions of this title, 
the Secretary is authorized to establish and carry out a nationwide 
computerized student loan data system containing information 
regarding loans made, insured, or guaranteed under part B and 
loans made under part E. The information in the data system shall 
include— 
"(1) the exact amount of such loans made; 
"(2) the names, social security numbers, and addresses of the 
borrowers (and in the case of dependent students the names and 
addresses of the parents of such students); 
"(3) the guaranty agency responsible for the guarantee of the 
' • 
• • 
loan in the case of loans made, insured, or guaranteed under 
part B; and 
"(4) the institution of higher education or organization 
responsible for loans made under part E. 
The information to be stored in the student loan data system 
established by this subsection shall be furnished by guaranty agen-
' - ' ' 
cies for loans made, insured, or guaranteed under part B and by 
* - 
- 
institutions of higher education for loans made under part E. 
"(b) ACCESS TO INFORMATION.—(1) Subject to the provisions of 
paragraphs (2) and (3), and notwithstanding the provisions of section 
552(a) of title 5, United States Code, relating to freedom of informa-
tion, access to information in the data system established and 
maintained pursuant to subsection (a) of this section shall be re-
i * 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1487 
stricted to individuals and Federal agencies, specifically authorized 
by the Secretary to have such access. 
"(2) In carrying out this subsection, the Secretary shall approve 
access to information for— 
"(A) research on student loan practices, student and parental 
indebtedness, repayment and debt collection trends, Federal 
costs associated with the guaranteed student loan program 
under part B of this title, including the cost of interest subsidies 
and special allowance payments; 
"(B) the improvement of Federal debt collection practices and 
Federal criminal prosecutions under this title, relating to loans 
made, insured, or guaranteed under part B or loans under part 
E of this title; 
"(C) furnishing information in response to an official request 
' 
made by any committee of the Congress; and 
"(D) any guaranty agency under part B, except that such 
access shall be limited to the name, social security number, and 
the amount of indebtedness, including the amount borrowed 
each year, of a borrower for whom the guaranty agency pro-
vides insurance. 
"(3) No name, address, or social security number of any individual 
borrower may be made available to any requesting individual. Fed-
eral agency, or organization, unless the Secretary determines that 
the request is connected with the enforcement or debt collection 
responsibilities imposed by Federal law on such individual, agency, 
or organization. 
"(4) In carrying out this subsection, the Secretary shall require Reports, 
semiannual reports (continuing the information set forth in subsec-
tion (a) (1) and (2)) from each guaranty agency responsible for the 
guarantee of loans made, insured, or guaranteed under part B and 
any institution of higher education or proprietary institution 
responsible for a loan made under part E. 
"(c) VERIFICATION NOT REQUIRED.—The Secretary shall not re-
quire lenders, guaranty agencies, or institutions of higher education 
to verify information or obtain eligibility or other information 
through the National Student Loan Data System prior to making, 
guaranteeing, or certifying a loan under part B or part E. 
"(d) REPORT TO CONGRESS.—The Secretary shall prepare and 
submit to the Congress twice in each fiscal year a report describing 
the results obtained by the establishment and operation of the 
student loan data system authorized by this section. 
TRAINING IN FINANCIAL AID AND STUDENT SUPPORT SERVICES 
"SEC. 486. (a) PROGRAM AUTHORITY.—The Secretary is authorized 
to enter into contracts with appropriate public agencies or nonprofit 
private organizations or institutions of higher education to provide 
training for financial aid administrators, student peer counselors, 
student staff or volunteers, and other part-time staff and volunteers 
who provide financial aid, admissions and academic counseling and 
outreach, and student support programs in postsecondary education 
in postsecondary institutions, communities, or statewide programs. 
"(b) USE OF FUNDS.—Financial assistance under this section may 
be used for— 
"(1) development of materials and in-service training and 
career awareness programs; 
Contracts. 
20 u s e 1093. 
100 STAT. 1488 
PUBLIC LAW 99-498—OCT. 17, 1986 
is? 
"(2) operation of short-term training institutes designed to 
improve the skills and career awareness of participants in such 
• institutes; and 
"(3) special programs to assist in training of students and 
part-time staff or volunteers at institutions eligible for assist-
ance under title III of this Act. 
"(c) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 
be appropriated $1,000,000 to carry out the provisions of this section 
for fiscal year 1981 and for each of the succeeding fiscal years 
ending prior to October 1,1986. 
' r • 
"PROGRAM PARTICIPATION AGREEMENTS 
20 use 1094. 
"SEC. 487. 
(a) REQUIRED FOR PROGRAMS OF ASSISTANCE; CON-
TENTS,—In order to be an eligible institution for the purposes of any 
program authorized under this title, an institution must be an 
institution of higher education or an eligible institution (as that 
term is defined for the purpose of that program) and shall, except 
with respect to a program under subpart 3 of part A, enter into a 
program participation agreement with the Secretary. The agree-
ment shall condition the initial and continuing eligibility of an 
institution to participate in a program upon compliance with the 
following requirements: 
"(1) The institution will use funds received by it for any 
program under this title and any interest or other earnings 
thereon solely for the purpose specified in and in accordance 
. with the provision of that program. 
"' "
^ *^ 
"(2) The institution shall not charge any student a fee for 
processing or handling any application, form, or data required 
to determine the student's eligibility for assistance under this 
title or the amount of such assistance, or for completing or 
handling the Federal Student Assistance Report provided for in 
section 483(e). 
-0 
"(3) The institution will establish and maintain such adminis-
trative and fiscal procedures and records as may be necessary to 
ensure proper and efficient administration of funds received 
from the Secretary or from students under this title. 
"(4) The institution will comply with the provisions of subsec-
^ ^' tion (b) of this section and the regulations prescribed under that 
subsection, relating to fiscal eligibility. 
Reports. 
"(5) The institution will submit reports to the Secretary and, 
in the case of an institution participating in a program under 
part B or part E, to holders of loans made to the institution's 
students under such parts at such times and containing such 
information as the Secretary may reasonably require to carry 
out the purpose of this title. 
"(6) The institution will not provide any student with any 
statement or certification to any lender under part B that 
qualifies the student for a loan or loans in excess of the amount 
that student is eligible to borrow in accordance with sections 
425(a), 428(a)(2), and 428(b)(1) (A) and (B). 
"(7) The institution will comply with the requirements of 
^" 
section 485. 
fs 
"(8) In the c£ise of an institution that advertises job placement 
rates as a means of attracting students to enroll in the institu-
-- 
tion, the institution will make available to prospective students, 
at or before the time of application, the most recent available 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1489 
data concerning employment statistics, graduation statistics, 
and any other information necessary to substantiate the 
truthfulness of the advertisements. 
"(9) In the case of an institution participating in a program 
State and local 
under part B, the institution will inform all eligible borrowers 
governments. 
enrolled in the institution about the availability and eligibility 
of such borrowers for State grant assistance from the State in 
which the institution is located, and will inform such borrowers 
; 
from another State of the source for further information 
concerning such assistance from that State. 
"(10) The institution certifies that it has in operation a drug 
abuse prevention program that is determined by the institution 
to be accessible to any officer, employee, or student at the 
institution. 
"(b) HEARINGS.—(1) An institution that has received written 
notice of a final audit or program review determination and that 
desires to have such determination reviewed by the Secretary shall 
submit to the Secretary a written request for review not later than 
45 days after receipt of notification of the final audit or program 
review determination. 
"(2) The Secretary shall, upon receipt of written notice under 
paragraph (1), arrange for a hearing on the record and notify the 
institution within 30 days of receipt of such notice the date, time, 
and place of such hearing. Such hearing shall take place not later 
than 120 days from the date upon which the Secretary notifies the 
institution. 
"(c) AUDITS; FINANCIAL RESPONSIBILITY; ENFORCEMENT OF STAND-
ARDS.—(1) Notwithstanding any other provisions of this title, the 
Secretary is authorized to prescribe such regulations as may be 
necessary to provide for— 
"(A)(i) except as provided in clause (ii), a financial and compli-
ance audit of an eligible institution, with regard to any funds 
obtained by it under this title or obtained from a student or a 
parent who has a loan insured or guaranteed by the Secretary 
under this title, at least once every 2 years and covering the 
period since the most recent audit, conducted by a qualified, 
. 
independent organization or person in accordance with stand-
ards established by the Comptroller General for the audit of 
governmental organizations, programs, and functions, and as 
prescribed in regulations of the Secretary, the results of which 
shall be submitted to the Secretary; or 
"(ii) with regard to an eligible institution which is audited 
under chapter 75 of title 31, United States Code, deeming such 
31 USC 7501 et 
i 
audit to satisfy the requirements of clause (i) for the period seq. 
covered by such audit; 
"(B) in matters not governed by specific program provisions, 
t. 
the 
establishment 
of reasonable 
standards 
of 
financial 
responsibility and appropriate institutional capability for the 
administration by an eligible institution of a program of student 
financial aid under this title; 
"(C) the establishment, by each eligible institution under part 
B responsible for furnishing to the lender the statement re- 
- ? 
% 
quired by section 428(a)(2)(A)(i), of policies and procedures by 
which the latest known address and enrollment status of any 
student who has had a loan insured under this part and who has 
either formally terminated his enrollment, or failed to re-enroll 
i, 
on at least a half-time basis, at such institution, shall be fur-
100 STAT. 1490 
PUBLIC LAW 99-498—OCT. 17, 1986 
State and local 
governments. 
>; nished either to the holder (or if unknown, the insurer) of the 
'^ h note, not later than 60 days after such termination or failure to 
re-enroll; and 
"(D) the limitation, suspension, or termination of the eligi-
bility for any program under this title of any otherwise eligible 
institution, or the imposition of a civil penalty under paragraph 
(2)(B) whenever the Secretary has determined, after reasonable 
notice and opportunity for hearing on the record, that such 
institution has violated or failed to carry out any provision of 
this title or any regulation prescribed under this title, except 
that no period of suspension under this section shall exceed 60 
days unless the institution and the Secretary agree to an exten-
sion or unless limitation or termination proceedings are initi-
ated by the Secretary within that period of time. 
"(2)(A) Upon determination, after reasonable notice and oppor-
tunity for a hearing on the record, that an eligible institution has 
engaged in substantial misrepresentation of the nature of its edu-
cational program, its financial charges, or the employability of its 
graduates, the Secretary may suspend or terminate the eligibility 
status for any or all programs under this title of any otherwise 
eligible institution, in accordance with procedures specified in para-
graph (1)(D) of this subsection, until the Secretary finds that such 
practices have been corrected. 
"(B)(i) Upon determination, after reasonable notice and oppor-
tunity for a hearing on the record, that an eligible institution— 
"(I) has violated or failed to carry out any provision of this 
title or any regulation prescribed under this title; or 
"(II) has engaged in substantial misrepresentation of the 
"--'^ nature of its educational program, its financial charges, and the 
employability of its graduates, 
the Secretary may impose a civil penalty upon such institution of 
not to exceed $25,000 for each violation or misrepresentation. 
"(ii) Any civil penalty may be compromised by the Secretary. In 
determining the amount of such penalty, or the amount agreed upon 
in compromise, the appropriateness of the penalty to the size of the 
institution of higher education subject to the determination, and the 
gravity of the violation, failure, or misrepresentation shall be 
considered. The amount of such penalty, when finally determined, 
or the amount agreed upon in compromise, may be deducted from 
anv sums owing by the United States to the institution charged. 
(3) The Secretary shall publish a list of State agencies which the 
Secretary determines to be reliable authority as to the quality of 
public postsecondary vocational education in their respective States 
for the purpose of determining eligibility for all Federal student 
assistance programs. 
"(d) DEFINITION OF EUGIBLE INSTITUTION.—For the purpose of this 
section, the term 'eligible institution' means any such institution 
described in section 435(a) of this Act. 
State and local 
governments. 
20 use 1095. 
TRANSFER OF ALLOTMENTS 
"SEC. 488. Up to 10 percent of the allotment of an eligible institu-
tion for a fiscal year under section 413D or 446 of this Act, may be 
transferred to, and used for the purposes of, the institution's allot-
ment under the other section within the discretion of such institu-
tion in order to offer an arrangement of types of aid, including 
institutional and State aid, which best fits the needs of each individ-
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1491 
ual student. The Secretary shall have no control over such transfer, 
except as specifically authorized, except for the collection and 
dissemination of information. 
"ADMINISTRATIVE EXPENSES 
"SEC. 489. (a) AMOUNT OF PAYMENTS.—From the sums appro- 20 use 1096. 
priated for any fiscal year for the purpose of the program authorized 
under subpart 1 of part A, the Secretary shall reserve such sums as 
may be necessary to pay to each institution with which he has an 
a^eement under section 487, an amount equal to $5 for each 
student at that institution who receives assistance under subpart 1 
of part A. In addition, an institution which has entered into an 
'
^ 
•riJOa 
agreement with the Secretary under subpart 2 of part A or part C 
(other than section 448), of this title or under part E of this title 
shall be entitled for each fiscal year which such institution disburses 
funds to eligible students under any such part to a payment for the 
purpose set forth in subsection (b). The payment for a fiscal year 
shall be payable from each such allotment by payment in accord-
ance with regulations of the Secretary and shall be equal to 5 
percent of the institution's first $2,750,000 of expenditures plus 4 
percent of the institution's expenditures greater than $2,750,000 and 
less than $5,500,000, plus 3 percent of the institution's expenditures 
in excess of $5,500,000 during the fiscal year from the sum of its 
grants to students under subpart 2 of part A, its expenditures during 
such fiscal year under part C for compensation of students, and the 
principal amount of loans made during such fiscal year from its 
student loan fund established under part E, excluding the principal 
amount of any such loans which the institution has agreed to assign 
under section 463(a)(6)(B). The payment for a fiscal year for the 
purpose of subsection (b) with respect to section 447 shall be payable 
from each allotment under part C in accordance with regulations of 
the Secretary, and shall be 10 percent of the institution's expendi-
tures during such fiscal year under such section. 
"(b) PURPOSE OF PAYMENTS.—The sums paid to institutions under 
this part are for the sole purpose of offsetting the administrative 
costs of the programs described in subsection (a). 
' 'CRIMINAL PENALTIES 
"SEC. 490. (a) IN GENERAL.—Any person who knowingly and will- 20 use 1097. 
fully embezzles, misapplies, steals, or obtains by fraud, false state-
ment, or forgery any funds, assets, or property provided or insured 
under this title shall be fined not more than $10,000 or imprisoned 
for not more than 5 years, or both; but if the amount so embezzled, 
misapplied, stolen, or obtained by fraud, false statement, or forgery 
does not exceed $200, the fine shall not be more than $1,000 and 
imprisonment shall not exceed one year, or both. 
"(b) ASSIGNMENT OF LOANS.—Any person who knowingly and 
willfully makes any false statement, furnishes any false informa-
tion, or conceals any material information in connection with the 
assignment of a loan which is made or insured under this title shall, 
upon conviction thereof, be fined not more than $1,000 or impris-
oned not more than one year, or both. 
"(c) INDUCEMENTS TO LEND OR ASSIGN.—Any person who know-
ingly and willfully makes an unlawful payment to an eligible lender 
under part B as an inducement to make, or to acquire by assign-
71-19A 0 - 89 - 1
A : QL. 3 Part2 
100 STAT. 1492 
PUBLIC LAW 99-498—OCT. 17, 1986 
ment, a loan insured under that part shall, upon conviction thereof, 
be fined not more than $1,000 or imprisoned not more than one year, 
or both. 
"(d) OBSTRUCTION OF JUSTICE.—Any person who knowingly and 
willfully destroys or conceals any record relating to the provision of 
assistance under this title with intent to defraud the United States 
*' 
'' 
or to prevent the United States from enforcing any right obtained by 
subrogation under this part, shall upon conviction thereof, be fined 
not more than $10,000 or imprisoned not more than 5 years, or both. 
"ADVISORY COMMITTEE ON STUDENT FINANCIAL ASSISTANCE 
20 use 1098. 
"SEC. 491. (a) ESTABLISHMENT AND PURPOSE.—(1) There is estab-
lished in the Department an independent Advisory Committee on 
Student Financial Assistance (hereafter in this section referred to as 
the 'Advisory Committee') which shall provide advice and counsel to 
the Congress and to the Secretary on student financial aid matters. 
"(2) The purpose of the Advisory Committee is— 
"(A) to provide extensive knowledge and understanding of the 
Federal, State, and institutional programs of postsecondary 
student assistance; 
"(B) to provide technical expertise with regard to systems of 
needs analysis and application forms; and 
"(C) to make recommendations that will result in the mainte-
nance of access to postsecondary education for low- and middle-
income students. 
"
O
t
>
) INDEPENDENCE OF ADVISORY COMMITTEE.—In the exercise of 
its functions, powers, and duties, the Advisory Committee shall be 
independent of the Secretary and the other offices and officers of the 
Department. The recommendations of the Committee shall not be 
subject to review or approval by any officer in the executive branch, 
but may be submitted to the Secretary for comment prior to submis-
sion to the Congress in accordance with subsection (f). 
"(c) MEMBERSHIP.—(1) The Advisory Committee shall have 11 
members of which— 
"(A) 3 members shall be appointed by the President pro 
tempore of the Senate upon the recommendation of the Major-
ity Leader and the Minority Leader, 
"(B) 3 members shall be appointed by the Speaker of the 
House of Representatives upon the recommendation of the 
.f*i,! - j m 
Majority Leader and the Minority Leader, and 
"(C) 5 members shall be appointed by the Secretary including, 
but not limited to representatives of States, institutions of 
higher education, secondary schools, credit institutions, stu-
dents, and parents. 
"(2) Not less than 7 members of the Advisory Committee shall be 
individuals who have been appointed on the basis of technical 
qualifications, professional standing and demonstrated knowledge in 
the fields of higher education and student aid administration, need 
analysis, financing postsecondary education, student aid delivery, 
and the operations and financing of student loan guarantee agen-
cies. 
"(d) FUNCTIONS OF THE COMMITTEE.—The Advisory Committee 
shall— 
"(1) develop, review, and comment annually upon the system 
of needs analysis established under sections 411A through 411E 
and part F of this title; 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1493 
"(2) monitor, apprise, and evaluate the effectiveness of stu-
dent aid delivery and recommend improvements; 
"(3) recommend data collection needs and student informa-
tion requirements which would improve access and choice for 
eligible students under this title and assist the Department of 
Education in improving the delivery of student aid and in 
assessing the impact of legislative and administrative policy 
proposals; 
"(4) review and comment upon, prior to promulgation, all 
regulations affecting programs under this title, including pro-
posed regulations; 
' ' 
"(5) recommend to the Congress and to the Secretary such 
,, 
studies, surveys, and analyses of student financial assistance 
V,.,, 
programs, policies, and practices, including the special needs of 
low-income, disadvantaged, and nontraditional students, and 
the means by which the needs may be met, but nothing in this 
section shall authorize the committee to perform such studies, 
surveys, or analyses; 
"(6) review and comment upon standards by which financial 
need is measured in determining eligibility for Federal student 
assistance programs; and 
"(7) appraise the adequacies and deficiencies of current 
student financial aid information resources and services and 
evaluate the effectiveness of current student aid information 
programs. 
"(e) OPERATIONS OF THE COMMITTEE.—(1) Each member of the 
Advisory Committee shall be appointed for a term of 3 years, except 
that, of the members first appointed— 
? j i»«'"' 
"(A) 4 shall be appointed for a term of 1 year; 
"(B) 4 shall be appointed for a term of 2 years; and 
•-^-' "(C) 3 shall be appointed for a term of 3 years, 
as designated at the time of appointment by the Secretary. 
"(2) Any member appointed to fill a vacancy occurring prior to the 
expiration of the term of a predecessor shall be appointed only for 
the remainder of such term. A member of the Advisory Committee 
shall, upon request, continue to serve after the expiration of a term 
until a successor has been appointed. A member of the Advisory 
Committee may be reappointed to successive terms on the Advisory 
Committee. 
"(3) The Advisory Committee shall elect a Chairman and a Vice 
Chairman from among its members. 
"(4) Six members of the Advisory Committee shall constitute a 
quorum. 
"(5) The Advisory Committee shall meet at the call of the Chair-
man or a majority of its members. 
iC , l~. 
"(f) SUBMISSION TO DEPARTMENT FOR COMMENT.—The Advisory 
Committee may submit its proposed recommendations to the 
Department of Education for comment for a period not to exceed 30 
davs in each instance. 
(g) COMPENSATION AND EXPENSES.—(1) Members of the Advisory 
Committee who are officers or full-time employees of the United 
States shall serve without compensation in addition to that received 
for their services as officers or employees of the United States; but 
they may be allowed travel expenses, including per diem in lieu 
of subsistence, as authorized by section 5703 of title 5, United 
States Code, for persons in the Government service employed 
intermittently. 
100 STAT. 1494 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(2) Members of the Advisory Committee who are not officers or 
full-time employees of the United States may each receive re-
imbursement for travel expenses incident to attending Advisory 
Committee meetings, including per diem in lieu of subsistence, as 
authorized by section 5703 of title 5, United States Code, for persons 
in the Government service employed intermittently. 
"(h) PERSONNEL AND RESOURCES.—(1) The Advisory Committee 
may appoint such personnel as may be necessary by the Chairman 
without regard to the provisions of title 5, United States Code, 
governing appointments in the competitive service, and may be paid 
5 use 5101 et 
without regard to the provisions of chapter 51 and subtitle III of 
*^9- 
.„„ 
chapter 53 of such title relating to classification and General Sched-
^ 
^^ 
ule pay rates, but no individual so appointed shall be paid in excess 
of the rate authorized for GS-18 of the General Schedule. 
"(2) In carrying out its duties under the Act, the Advisory 
Committee shall consult with other Federal agencies, representa-
tives of State and local governments, and private organizations to 
the extent feasible. 
"(3)(A) The Advisory Committee is authorized to secure directly 
from any executive department, bureau, agency, board, commission, 
office, independent establishment, or instrumentality information, 
suggestions, estimates, and statistics for the purpose of this section 
and each such department, bureau, agency, board, commission, 
office, independent establishment, or instrumentality is authorized 
and directed, to the extent permitted by law, to furnish such 
information, suggestions, estimates, and statistics directly to the 
Advisory Committee, upon request made by the Chairman. 
Contracts. 
"(B) The Advisory Committee may enter into contracts for the 
acquisition of information, suggestions, estimates, and statistics for 
the purpose of this section. 
"(4) The Advisory Committee is authorized to obtain the services 
of experts and consultants in accordance with section 3109 of title 5, 
United States Code. 
"(5) The head of each Federal agency shall, to the extent not 
prohibited by law, cooperate with the Advisory Committee in carry-
ing out this section. 
(6) The Advisory Committee is authorized to utilize, with their 
consent, the services, personnel, information, and facilities of other 
Federal, State, local, and private agencies with or without 
reimbursement. 
"(i) AVAILABILITY OF FUNDS.—An amount, not to exceed $500,000 
in any fiscal year, shall be available from the amount appropriated 
for each such fiscal year from salaries and expenses of the Depart-
ment for the costs of carrying out the provisions of this section.". 
20 use 1091 
(b) EFFECTIVE DATES.—(1) Sections 483(e) and 484(d) of the Act as 
note. 
amended by this section shall apply to student assistance awarded 
for periods of enrollment beginning on or after July 1,1987. 
(2) The changes made in section 484(aXl) of the Act shall apply to 
student gissistance awarded for periods of enrollment beginning on 
or after July 1,1987. 
(3) Section 484(c) of the Act as amended by this section shall apply 
only to student assistance awarded for periods of enrollment begin-
ning on or after July 1, 1987, to individuals who were not awarded 
such assistance for any preceding period of enrollment. 
(4) Sections 484(f), 485(b), and 487(aX10) of the Act as amended by 
this section shall apply only to periods of enrollment beginning on 
or after July 1, 1987. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1495 
SEC. 408. CONFORMING PROVISIONS, 
(a) APPLICATION OF STUDENT FINANCIAL ASSISTANCE TECHNICAL 
AMENDMENTS TO ACADEMIC YEARS 1986-1987, AND 1987-1988.—The 
Student Financial Assistance Technical Amendments Act of 1982 is 
amended— 
(1) in sections 3, 4, and 6 b^ striking out "and 1986-1987" each 
place it appears and inserting in lieu thereof "1986-1987, and 
1987-1988"; 
(2) in section 5, by striking out "and 1986-1987" each place it 
appears and 
inserting in lieu thereof 
"1986-1987, and 
1987-1988" in subsections (a), (b)(1), and (c); 
(3) in section 5(b)(2), by striking out "and" at the end of 
subparagraph (B), by striking out the period at the end of 
subparagraph (C) and inserting in lieu thereof "; and", and by 
inserting after such paragraph the following new subparagraph: 
"(D) for the period from October 1, 1984, through Septem-
ber 30, 1985, and the arithmetic mean of such index for the 
period from October 1,1985, through September 30,1986, in the 
case of academic year 1987-1988."; 
(4) in section 5(b)(3)— 
(A) by striking out "1985-1986), and" and inserting in lieu 
thereof "1985-1986),"; and 
(B) by inserting before the period at the end thereof the 
following: ", and immediately after such publication for 
September 1986 (with respect to academic year 1987-1988)"; 
(5) in section 5(d), by striking out "and" at the end of para-
graph (2), by striking out the period at the end of paragraph (3) 
and inserting in lieu thereof "; and", and by inserting after such 
paragraph the following new paragraph: 
"(4) not later than April 1, 1986, for academic year 1987-
1988."; 
(6) in section 9(a)— 
(A) by inserting "and" after "June 30,1987"; and 
(B) by striking out "from July 1, 1988, through June 30, 
1989, and from July 1, 1989, through June 30, 1999,"; and 
(7) in section 9(c), by inserting "and" at the end of paragraph 
(3) and by striking out paragraphs (5), (6), and (7). 
(b) REPEAL.—Effective with respect to any academic year begin-
ning on or after July 1, 1988, the Student Financial Assistance 
Technical Amendments Act of 1982 is repealed. 
TITLE V—TEACHER TRAINING AND DEVELOPMENT 
SEC. 501. REVISION OF TITLE V. 
(a) AMENDMENT.—Title V of the Act is amended to read as follows: 
20 u s e 1070a 
note, 1089 note, 
1070a note. 
20 u s e 1070a 
note. 
20 u s e 1078 
note. 
20 u s e 1001 
note, 1070a note, 
1070b-3 note, 
1078 note, 
1087bb note, 
1221e-l note, 
1089 note; 42 
u s e 2752 note. 
"TITLE V—EDUCATOR RECRUITMENT, RETENTION, AND 
DEVELOPMENT 
STATEMENT OF PURPOSE; APPLICABILITY 
'SEC. 501. It is the purpose of this title— 
"(1) to encourage the establishment and maintenance of pro-
grams that provide teacher training to individuals who are 
moving to careers in education from other occupations; 
"(2) to promote university partnerships with local education 
agencies serving at-risk students, providing stronger linkages 
20 use 1101. 
100 STAT. 1496 
PUBLIC LAW 99-498—OCT. 17, 1986 
State and local 
governments. 
between teachers and such students, and with local labor, busi-
ness, and professional associations; 
"(3) to provide assistance to our Nation's teaching force for 
the continued improvement of their professional skills and 
expansion of their subject matter expertise, including pre-school 
and early childhood education specialists; 
"(4^ to improve the leadership and administrative skills of 
elemc ntary and secondary school administrators; 
"(5) to encourage academically qualified students to become 
teachers through scholarship assistance; and 
"(6) to encourage States to assess their need for teachers and 
to plan for meeting current and projected teacher shortages. 
:;. 
AUTHORIZATION OF APPROPRIATIONS 
20 use 1101a. 
"SEC. 502. (a) MID-CAREER TEACHER TRAINING PROGRAMS.—For 
part A, there are authorized to be appropriated $3,500,000 for fiscal 
year 1987, and such sums as may be necessary for the 4 succeeding 
fiscal years. 
"(h) SCHOOL, COLLEGE, AND UNIVERSITY PARTNERSHIPS.—For part 
B, there are authorized to be appropriated $15,000,000 for fiscal year 
1987, and such sums as may be necessary for the 4 succeeding fiscal 
years. 
"(c) PROFESSIONAL DEVELOPMENT AND LEADERSHIP PROGRAMS.—(1) 
For subpart 1 of part C, there are authorized to be appropriated 
$15,000,000 for fiscal year 1987, and such sums as may be necessary 
for the 4 succeeding fiscal years. 
"(2) For subpart 2 of part C, there are authorized to be appro-
priated $10,000,000 for fiscal year 1987, and such sums as may be 
necessary for the 4 succeeding fiscal years. 
"(d) TEACHER SCHOLARSHIPS AND FELLOWSHIPS.—(1) For subpart 1 
„ 
, 
of part D, there are authorized to be appropriated $13,500,000 for 
^ ' 
fiscal year 1987, and such sums as may be necessary for the 
4 
succeeding fiscal years. 
"(2) For subpart 2 of part D, there are authorized to be appro-
priated $2,000,000 for fiscal year 1987, and such sums as may be 
necessary for the 4 succeeding fiscal years. 
"(e) TASK FORCES ON TEACHER EDUCATION.—For part E, there are 
authorized to be appropriated $1,000,000 for fiscal year 1987, and 
such sums as may be necessary for the 4 succeeding fiscal years. 
"PART A—MIDCAREER TEACHER TRAINING FOR NONTRADITIONAL 
STUDENTS 
STATEMENT OF PURPOSE 
20 use 1103. 
"SEC. 511. It is the purpose of this part to encourage institutions of 
higher education with schools or departments of education to estab-
lish and maintain programs that will provide teacher training to 
individuals who are moving to a career in education from another 
occupation. 
jrtjr^fii-:'-: 
"SELECTION PROCEDURES 
- 
'•-" 
Grants. 
"SEC. 512. From the funds available for this part, the Secretary 
20 use 1103a. 
shall make grants to institutions of higher education on the basis of 
the competitive selection among qualifying applications. Institutions 
selected as recipients shall be awarded (1) an initial planning grant 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1497 
for use during the first 2 fiscal years after selection, and (2) for 
institutions demonstrating successful performance with the plan-
ning grant, a renewal grant for use during not more than 2 addi-
tional years. 
APPLICATIONS 
"SEC. 513. (a) CONTENTS OF APPUCATIONS.—Applications for grants 
under this part shall demonstrate that— 
"(1) the applicant will establish and maintain a program of 
midcareer teacher retraining designed to prepare individuals 
for teacher certification requirements who already have a 
baccalaureate or advanced degree and job experience in edu-
cation-related fields of study, including pre-school and early 
childhood education; 
"(2) the applicant has designed a program which includes at 
least the following elements: 
"(A) a screening mechanism to assure that individuals 
who are admitted to the program possess the current sub-
ject matter knowledge and the characteristics that would 
make them likely to succeed as classroom teachers; 
"(B) a clear set of program goals and expectations which 
are communicated to participants; and 
"(C) a curriculum that, when successfully completed, will 
provide participants with the skills and credentials needed 
—sl> 
to teach in specific subject areas, as well as a realistic 
perspective on the educational process; 
"(3) the program has been developed with the cooperation and 
assistance of the local business community; 
"(4) the program will be operated under a cooperative agree-
ment between the institution and one or more State or local 
educational agencies; and 
"(5) the program will be designed and operated with the 
active participation of qualified classroom teachers, including 
early childhood education specialists, and will include an in-
service training component and follow-up assistance. 
"(b) REVIEW OF APPUCATIONS.—Applications for grants under this 
part shall be reviewed by a panel of experts in teacher training 
designated by the Secretary. The Secretary shall, to the extent of 
available funds, select at least one applicant from each of the 10 
regions served by the Department and assure that programs offered 
reflect all significant areas of national need in which shortages 
exist. 
Grants. 
20 u s e 1103b. 
State and local 
governments. 
AMOUNT OF GRANTS 
"SEC. 514. The initial planning grant to an institution of higher 
education under this part shall not exceed $100,000 for the 2 years 
for which it is available. The renewal grant to an institution under 
this part shall not exceed $50,000 for each of the 2 years for which 
it is available. 
20 u s e 1103c. 
REPORTS AND INFORMATION 
"SEC. 515. Each institution of higher education that receives a 
grant under this part shall submit to the Secretary such reports and 
other information on the program it conducts under this part as the 
Secretary deems necessary. The Secretary shall disseminate such 
20 u s e 1103d. 
100 STAT. 1498 
PUBLIC LAW 99-498—OCT. 17, 1986 
Grants. 
20 use 1105a. 
information to other institutions of higher education for the purpose 
of promoting greater use of midcareer teacher training programs 
without direct Federal financial assistance. 
"PART B—SCHOOL, COLLEGE, AND UNIVERSITY PARTNERSHIPS 
"PURPOSE 
20 use 1105. 
"SEC. 521. It is the purpose of this part to encourage partnerships 
between institutions of higher education and secondary schools 
serving low-income students, to support programs that improve the 
academic skills of public and private nonprofit secondary school 
students, increase their opportunity to continue a program of edu-
cation after secondary school and improve their prospects for 
employment after secondary school. 
"PARTNERSHIP AGREEMENT 
"SEC. 522. (a) PARTNERSHIP AGREEMENT.—To be eligible for a grant 
under this part, an institution of higher education and a local 
education agency must enter into a written partnership a^eement. 
A partnership may include businesses, labor organizations, pro-
fessional associations, community-based organizations, or other 
private or public agencies or gissociations. All partners shall sign the 
agreement. 
"(b) CONTENTS OF AGREEMENT.—The agreement shall include— 
"(1) a listing of all participants in the partnerships; 
"(2) a description of the responsibilities of each participant in 
the partnership; and 
K_, .,j<. , . 
"(3) a listing of the resources to be contributed by each 
. \ ' ,,iv,> 
participant in the partnership. 
"GRANTS 
20 use 1105b. 
"SEC. 523. (a) DIVISION BETWEEN SCHOOL-YEAR AND SUMMER PRO-
GRAMS.—From the funds appropriated for this part pursuant to 
section 502(b), the Secretary shall reserve 65 percent to carry out 
programs operating during the regular school year and 35 percent to 
carry out programs operating during the summer. 
"(b) AMOUNT AND USE OF GRANTS.—From such funds, the Sec-
retary shall make grants of no less than $250,000 and no more than 
$1,000,000. The grants may be used by the partnership for programs 
that— 
"(1) use college students to tutor secondary school students 
and improve their basic academic skills; 
"(2) are designed to improve the basic academic skills of 
J
, ,,, : ; 
secondary school students; 
"(3) are designed to increase the understanding of specific 
subjects of secondary school students; 
"(4) are designed to improve the opportunity to continue a 
program of education after graduation for secondary school 
students; and 
"(5) are designed to increase the prospects for employment 
after graduation of secondary school students. 
Disadvantaged 
"(c) PREFERENCES.—In making grants Under this part, the Sec-
persons, 
retary shall give a preference to— 
"(1) programs which will serve predominantly low-income 
communities; 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1499 
"(2) partnerships which will run programs during the regular 
school year and the summer; and 
"(3) programs which will serve educationally disadvantaged 
students; potential dropouts; pregnant, adolescent, and teen 
parents; or children of migratory agricultural workers or of 
migratory fishermen. 
"APPLICATION FOR GRANTS 
"SEC. 524. (a) APPUCATION REQUIRED.—A partnership desiring to 
20 USC ll05c. 
receive a grant under this part shall submit an application to the 
Secretary, 
"(b) CONTENTS OF APPLICATION.—The application shall include— 
"(1) the written and signed partnership agreement; 
"(2) a listing of the public and private nonprofit secondary 
school or schools to be involved in the program; 
"(3) a description of the programs to be developed and oper-
ated by the partnership; 
"(4) Eissurances to the Secretary that— 
"(A) the partnership will establish a governing body 
; ' 
including one representative of each participant in the 
partnership; 
"(B) Federal funds will provide no more than 70 percent 
of the cost of the project in the first year, 60 percent of such 
I " 
costs in the second year, and 50 percent of such costs in the 
third year and any subsequent year; 
"(C) a local educational agency receiving funds under this 
subpart shall not reduce its combined fiscal effort per stu-
dent or its aggregate expenditure on education; and 
"(D) a local educational agency receiving funds under this 
part shall use the Federal funds so as to supplement and, to 
the extent practical, increase the resources that would, in 
the absence of such Federal funds, be made available from 
non-Federal sources for the education of students partici-
.: • 
pating in the project, and in no case may funds be used to 
supplant such non-Federal funds; and 
"(5) provide such information and meet such conditions as 
may be required by the Secretary. 
"COMMUNITY COLLEGE PILOT PROJECT 
"SEC. 525. (a) PROGRAM AUTHORIZED.—In addition to the grants 
20 USC il05d. 
awarded under section 523, the Secretary is authorized to award 4 
grants for pilot community college partnership projects under this 
section. 
"(b) PARTNERSHIP AGREEMENTS.—To be eligible for a grant under 
this section, a community college shall enter into a partnership 
agreement in accordance with section 522 with a local educational 
agency and at least one local business or industry. 
"(c) AMOUNT AND USE OF GRANTS.—Grants under this section 
shall be no less than $250,000. The grants may be used by the 
partnership for programs that— 
"(1) use college students to tutor secondary school students 
and improve their basic academic skills; 
"(2) are designed to improve the b£isic academic skills of 
secondary school students; 
100 STAT. 1500 
PUBLIC LAW 99-498—OCT. 17, 1986 
Michigan. 
Vermont. 
California. 
Missouri. 
7- •' 
"(3) are designed to increase the understanding of specific 
subjects of secondary school students; 
"(4) are designed to improve the opportunity to continue a 
program of education after graduation for secondary school 
students; and 
"(5) are designed to increase the prospects for employment 
after graduation of secondary school students. 
"(d) APPLICATION.—To receive a grant under this section, a 
community college shall submit an application in accordance with 
section 524(b). 
"(e) AWARD OP GRANTS.—In making awards under this section, the 
Secretary shall give preference to applications indicating that the 
business or industry partner is engaged in technological or aero-
space activities. 
"(f) EuGiBLE INSTITUTIONS.—The institutions which may be 
awarded grants under this section are— 
"(1) the Wayne County Community College of Wayne County, 
Michigan; 
"(2) the Community College of Vermont; 
"(3) the Compton Community College of Compton, California; 
and 
"(4) the Metropolitan Community College of Kansas City, 
Missouri. 
"(g) REPORTS AND INFORMATION.—Each community college that 
receives a grant under this subpart for establishing pilot projects 
shall submit to the Secretary such reports and other information as 
is requested in order to evaluate program effectiveness and to 
disseminate information on exemplary programs to other commu-
nity colleges, area vocational-technical schools, and other institu-
tions of higher education, for the purposes of promoting greater use 
of university-secondary school partnerships without direct Federal 
financial assistance. 
"PART C—PROFESSIONAL DEVELOPMENT AND LEADERSHIP PROGRAMS 
"SUBPART 1—PROFESSIONAL DEVELOPMENT RESOURCE CENTERS 
Grants. 
20 u s e 1107. 
PROGRAM AUTHORITY AND PURPOSE 
"SEC. 531. (a) AUTHORITY.—(1) The Secretary is authorized to make 
grants under this subpart to pay the Federal share of programs to 
assist teachers from public and private nonprofit schools in the 
continuous improvement of their professional skills and the expan-
sion and updating of their subject matter expertise by establishing 
professional development resource centers for teachers. 
"(2) The Federal share for each fiscal year shall be 50 percent. 
"(b) PURPOSE.—It is the purpose of this subpart to assist in the 
establishment of professional development resource centers that 
will— 
"(1) help teachers make effective use of educational tools 
including understanding new technologies and their application; 
riji. 
"(2) enhance teachers^ subject matter expertise; 
"(3) help teachers 
learn 
new clsissroom 
management/ 
techniques; 
• ..,«fi.>v ^^.i, <^.^^.^..---^ 
• • .j-^ 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1501 
"(4) help teachers learn and apply the latest research on 
learning and teaching, including pre-school and early childhood 
education and development; and 
"(5) help teachers to apply creative approaches toward achiev-
ing instructional goals, including making the best use of avail- 
»-- • 
able community resources. 
"GEOGRAPHICAL DISTRIBUTION OF GRANTS 
"SEC. 532. In making grants under this subpart, the Secretary State and local 
shall ensure that eligible appUcants within each State receive suffi- |A\®TqJ?^f|J3f' 
cient funds to plan, establish, or operate at least one professional 
^' 
development resource center within the State in each fiscal year. 
GRANT REQUIREMENTS 
"SEC. 533. (a) EUGIBLE APPUCANTS.—The Secretary is authorized 
to make grants to local educational agencies or consortia of local 
educational agencies, in accordance with the provisions of this 
section, to assist such agencies in planning, establishing, and operat-
ing professional development resource centers. 
"(b) DEFINITION OF CENTER.—For the purpose of this part, the 
term 'professional development resource centers' means any year-
round program operated by a local educational agency, a combina-
tion of such agencies, or an educational service agency which serves 
teachers from public and private nonprofit schools, including pre-
school and early childhood educational specialists, in a State or from 
an area or community within a State. Through the centers, teachers, 
with the assistance of such consultants and experts as may be 
necessary, including expertise available at institutions of higher 
education, shall conduct activities to advance the goal of profes-
sional excellence and to improve teaching skills for the teachers 
they serve. 
"(c) USE OF FUNDS.—Grants under this subpart may be used for— 
"(1) developing and disseminating curricula designed to meet 
the educational needs of students in pre-school and kinder-
garten through grade 12, in the community, area, or State being 
served, including the use of educational research findings or 
new or improved methods, practices, and techniques in the 
development of such curricula, and including the use of tech-
nology and telecommunications; 
"(2) providing training to enable teachers to better meet the 
educational needs of students, including pre-school students, 
and to familiarize teachers with developments in curriculum, 
testing, and educational research including the 
manner 
in which the research can be used to improve classroom 
instruction; 
"(3) providing for dissemination of information to those 
served by the center and to other professional development 
resource centers nationally about the activities and services of 
the centers; 
"(4) bringing together teachers and materials from various 
school sites to serve as resources for teachers using the center; 
"(5) encouraging collaborative activities between pre-school, 
elementary and secondary school teachers and faculty at 
institutions of higher education; 
State and local 
governments. 
20 u s e 1107b. 
100 STAT. 1502 
PUBLIC LAW 99-498—OCT. 17, 1986 
"
* ' 
"(6) encouraging the application of institutional and commu-
nity resources to the goal of improving the quality of classroom 
instruction; and 
Disadvantaged 
"(7) providing professional development opportunities for 
persons. 
teachers of special population groups (pre-school, handicapped 
children, limited English proficient children, educationally and 
economically disadvantaged children) in rural settings. 
"PROFESSIONAL DEVELOPMENT POUCY BOARD 
20 use 1107c. 
"SEC. 534. Each professional development resource center shall be 
planned and operated under the supervision of a professional devel-
opment policy board, the majority of which shall be representatives 
or designees of the public and private nonprofit, pre-school, ele-
mentary and secondary classroom teachers to be served by such 
center. Such board shall also include individuals representative of, 
or designated by, school administrators, the school board (or boards) 
of the local educational agency (or agencies) served by such center, 
local business, and at least one representative designated by institu-
tions of higher education, when such institutions are located within 
reasonable proximity of the center, including (but not limited to) 
institutions that have departments, schools, or colleges of education. 
Grants. 
State and local 
governments. 
20 u s e 1107d. 
SUBMISSION AND APPROVAL OF APPUCATIONS 
"SEC. 535. (a) SUBMISSION.—(1) Any local educational agency or 
any consortium of local educational agencies including educational 
service agencies, desiring to receive a grant under this subpart shall 
make application therefor at such time, in such manner, and 
containing or accompanied by such information, as the Secretary 
may by regulation require. Each application shall be submitted 
through the State educational agency of the State in which the 
applicant is located. Each such State agency shall review the 
application, make comments thereon, and recommend each applica-
tion the State agency finds should be approved. The recommenda-
tions of the State education agency shall be taken into consideration 
by the Secretary in awarding grants under this part. 
"(2) Each State education agency, in reviewing local educational 
agency applications for a grant under this subpart, shall seek to 
assure an equitable within-State geographical distribution of center 
grant funds so that both large urban and small rural school districts 
are served. 
"(b) MINIMUM REQUIREMENTS.—A grant under this subpart may 
be made only if the application provides— 
"(1) satisfactory assurances that the program designed for the 
professional development resource center is based on a thor-
ough assessment of instructional and professional development 
needs identified by the teachers to be served, including early 
childhood educational specialists, and establishes goals for the 
center derived from such assessment; 
"(2) satisfactory assurances that the program the center plans 
to provide will meet the needs of the teachers served, including 
assurances that center activities will lead to in-depth and 
incremental knowledge and skill development; 
"(3) a description of the activities planned to meet the center's 
goals; 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1503 
"(4) procedures for the conduct of a yearly evaluation of 
center activities; 
"(5) satisfactory assurances that the center will employ a full-
time center director who has had classroom teaching experience 
and other staff as may be necessary; 
"(6) satisfactory assurances that the applicant will pay the 
non-Federal share of the cost of the program for which assist-
ance is sought and that 50 percent of such non-Federal share 
shall be paid by the State educational agency and 50 percent of 
the non-Federal share shall be from local resources, including 
institutions of higher education and other public and private 
non-Federal sources; and 
"(1) satisfactory assurances that the facilities of the center 
will not be used for the purpose of influencing the result of an 
election to an office in Federal, State, or local government or for 
the purpose of supporting or opposing any campaign for such 
office. 
"(c) SELECTION PROCEDURES.—(1) In approving any application 
under this subpart, the Secretary shall take into account the re-
sources which the applicant will provide in addition to Federal 
funds provided under this or any other Federal program. 
"(2) In approving applications under this subpart, the Secretary 
shall substantially involve teachers, including early childhood edu-
cational specialists, in reviewing and recommending programs for 
funding. 
"(d) SUBCONTRACTING.—Any local educational agency having an 
application approved under this subpart may contract with an 
institution of higher education to carry out activities under, or 
provide technical assistance in connection with, such application. 
"(e) RESERVATION FOR DIRECT EXPENDITURES.—Notwithstanding 
the provisions of subsection (a)(1) of this section with respect to the 
requirement that professional development resource centers be 
operated by local educational agencies, 10 percent of the funds 
expended under this subpart may be expended directly by the 
Secretary to make grants to institutions of higher education to 
operate professional development resource centers, subject to the 
other provisions of this subpart. 
Contracts. 
'SUBPART 2—LEADERSHIP IN EDUCATIONAL ADMINISTRATION 
DEVELOPMENT 
PURPOSE; INTENTION; REGULATIONS 
"SEC. 541. (a) PURPOSE.—It is the purpose of this subpart to 
improve the level of student achievement in public and private 
nonprofit elementary and secondary schools through the enhance-
ment of the leadership skills of school administrators by establish-
ing technical assistance centers for each State to promote the 
development of the leadership skills of public and private nonprofit 
elementary and secondary school administrators with particular 
emphasis upon increasing access for minorities and women to 
administrative positions. 
"(b) INTENTION.—It is the intention of Congress that contractors 
seeking to establish technical assistance and training centers should 
design programs which upgrade the skills of elementary and second-
ary school administrators in— 
State and local 
governments. 
Minorities. 
Women. 
20 u s e 1109. 
Contracts. 
100 STAT. 1504 
PUBLIC LAW 99-498—OCT. 17, 1986 
•
^
f
* ' "(1) enhancing the schoolwide learning environment by 
assessing the school climate, setting clear goals for improve-
ment, and devising strategies for completing manageable 
projects with measurable objectives; 
"(2) evaluating the school curriculum in order to assess its 
effectiveness in meeting academic goals; 
"(3) developing skills in instructional analysis to improve 
the quality of teaching through classroom observation and 
supervision; 
"(4) mastering and implementing objective techniques for 
evaluating teacher performance; and 
"(5) improving communication, problemsolving, student dis-
cipline, time-management, and budgetary skills. 
"(c) REGULATIONS.—The Secretary is authorized to prescribe such 
regulations as may be necessary to carry out this subpart. 
"ALLOCATION OF APPROPRIATIONS 
20 use 1109a. 
"SEC. 542. Of the amount appropriated for this subpart for any 
fiscal year, the Secretary shall make available an amount as may be 
necessary for establishing and operating a technical assistance 
center in each State, but not less than $150,000 for each State. 
State and local 
governments. 
20 u s e 1109b. 
Women. 
Minorities. 
TECHNICAL ASSISTANCE CENTERS 
"SEC. 
543. (a) EUGIBLE CONTRACTS RECIPIENTS.—The Secretary 
shall, subject to the availability of funds pursuant to section 542, 
enter into contracts with local educational agencies, intermediate 
school districts. State educational agencies, institutions of higher 
education, 
private 
management 
organizations, 
or 
nonprofit 
organizations (or consortium of such entities) for the establishment 
and operation of training centers in each State in accordance with 
the requirements of this section and section 544. 
"(h) CONTRACT REQUIREMENTS.—Each contract entered into under 
subsection (a) shall require the contractor— 
"(1) to make the services of the technical assistance center 
available to school administrators from any of the public 
and private nonprofit schools within the State served by that 
contractor; 
"(2) to collect information on school leadership skills; 
"(3) to assess the leadership skills of individual participants 
based on established effective leadership criteria; 
"(4) to conduct training programs on leadership skills for new 
school administrators and to conduct training seminars on 
leadership skills for practicing school administrators, with 
particular emphasis on women and minority administrators; 
"(5) to operate consulting programs to provide personnel 
within school districts with advice and guidance on leadership 
skills; 
"(6) to maintain training curricula and materials on leader-
ship skills drawing on expertise in business, academia, civilian 
and military governmental agencies, and existing effective 
schools; 
"(7) to conduct programs which— 
"(A) make available executives from business, scholars 
-iMt 
from various institutions of higher education, and practic-
ing school administrators; and 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1505 
"(B) offer internships in business, industry, and effective 
school districts to school administrators, 
for the purpose of promoting improved leadership skills of such 
administrators; 
"(8) to disseminate information on leadership skills associated 
with effective schools; and 
"(9) to establish model administrator projects. 
"(c) SELECTION OF CONTRACTORS.—In making a selection among 
applicants for any contract under this section, the Secretary shall 
take into account whether the applicant, if selected, would be able to 
operate its programs in a manner which would emphasize develop-
ment of leadership skills identified by graduate schools of manage-
ment and graduate schools of education. 
"GENERAL CRITERIA FOR CONTRACTS 
"SEC. 544. (a) CONTRACT REQUIREMENTS.—The following criteria 
20 use ii09c. 
shall apply to each contract under this subpart: 
"(1) The contract shall assure the involvement of pri-
vate sector managers and executives in the conduct of such 
programs. 
"(2) The contract shall contain assurances of an ongoing 
organizational commitment to carrying out the purposes of this 
subpart through (A) obtaining matching funds for such pro-
grams in cash or in kind at least equal in amount to the amount 
of funds provided under this subpart, (B) making in-kind con-
tributions to such programs, (C) demonstrating a commitment 
to continue to operate such programs after expiration of fund-
ing under this subpart, and (D) organizing a policy advisory 
committee including (but not limited to) representatives from 
i ;, . 
business, private foundations, private nonprofit schools, and 
local and State educational agencies. 
"(3) The contract shall indicate the level of development of 
human relations skills which its programs will instill by (A) 
identifying the credentials of the staff responsible for such 
development; (B) describing the manner in which such skills 
will be developed; and (C) describing the manner in which the 
program deals with human relations issues facing education 
administrators. 
"(4) The contract shall establish a system for the evaluation of 
the programs conducted. 
"(b) DURATION OF CONTRACT.—Each contract under this subpart 
shall be for a term of 3 years subject to the availability of appropria-
tions. Such contract shall not be renewable, except that a single 
3-year extension may be granted if the contractor agrees to maintain 
the programs with assistance under this part reduced by one-half. 
DEFINITIONS 
'SEC. 545. For the purpose of this subpart— 
"(1) the term 'school administrator' means a principal, eissist-
ant principal, district superintendent, and other local school 
administrators; and 
"(2) the term 'leadership skills' includes, but is not limited to, 
managerial, administrative, evaluative, communication and dis-
ciplinary skills and related techniques. 
20 use 1109d. 
100 STAT. 1506 
PUBLIC LAW 99-498—OCT. 17, 1986 
» • 
"PART D—TEACHER SCHOLARSHIPS AND FELLOWSHIPS 
"SUBPART 1—CONGRESSIONAL TEACHER SCHOLARSHIP PROGRAMS 
"PURPOSE 
20 use nil. 
"SEC. 551. It is the purpose of this subpart to make available, 
through grants to the States, scholarships during fiscal years 1987 
through 1991 to a maximum of 10,000 individuals who are outstand-
ing high school graduates and who demonstrate an interest in 
teaching, in order to enable and encourage those individuals to 
pursue teaching careers in education at the pre-school, elementary 
or secondary level. Such scholarships shall be referred to as 
'Congressional Teacher Scholarships'. 
"ALLOCATION AMONG STATES 
20 use 1111a. 
"SEC. 552. (a) PER CAPITA ALLOCATION.—From the sums appro-
priated for this subpart pursuant to section 502(d) for any fiscal 
year, the Secretary shall allocate to any State an amount which 
bears as nearly as possible the same ratio to such sums as the 
number of persons in that State bears to the number of persons in 
all States. 
"Ot)) USE OF CENSUS DATA.—For the purpose of this section, the 
number of persons in a State and in all States shall be determined 
by the most recently available data from the United States Census 
Bureau. 
State and local 
governments. 
20 u s e 1111b. 
GRANT APPUCATIONS 
"SEC. 553. (a) SUBMISSION OF APPUCATIONS.—The Secretary is 
authorized to make grants to States in accordance with the provi-
sions of this subpart. In order to receive a grant under this subpart, 
a State shall submit an application at such time or times, in such 
manner, and containing such information as the Secretary may 
prescribe by regulation. Such application shall set forth a program 
of activities for carrying out the purposes set forth in section 546 in 
such detail as will enable the Secretary to determine the degree to 
which such program will accomplish such purposes and such other 
policies, procedures, and assurances as the Secretary may require by 
regulation. 
"(b) CONTENT OF APPUCATIONS.—The Secretary shall approve an 
application under this subpart only if the application— 
"(1) describes the selection criteria and procedures to be used 
by the State in the selection of scholarships under this part 
which satisfy the provisions of this part; 
"(2) designates the State agency which administers the pro-
gram under subpart 3 of part A of title IV, relating to State 
student incentive grants, or the State agency with which the 
Secretary has an agreement under section 428(b); 
"(3) describes the outreach effort the State agency intends vo 
use to publicize the availability of Congressional Teacher Schol-
arships to high school students in the State; 
"(4) provides assurances that each recipient eligible under 
section 555(b) of this part who receives a Congressional Teacher 
Scholarship shall enter into an agreement with the State 
agency under which the recipient shall— 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1507 
"(A) within the 10-year period after completing the post-
secondary education for which the Congressional Teacher 
Scholarship was awarded, teach, for a period of not less 
than 2 years for each year for which assistance was re-
ceived, in a public or private nonprofit elementary or 
secondary school in any State, in a public education pro-
gram in any State, or, on a full-time basis, handicapped 
children or children with limited English proficiency in a 
private nonprofit school, except that, in the case of individ-
uals who teach in a shortage area established by the Sec-
retary pursuant to section 428(b)(4), the requirements of 
this subparagraph shall be reduced by one-half; 
"(B) provide the State agency evidence of compliance 
with section 557 as required by the State agency; and 
3 
"(C) repay all or part of a Congressional Teacher Scholar-
ship received under section 554 plus interest and, if ap-
plicable, reasonable collection fees, in compliance with 
regulations issued by the Secretary under section 557, in 
the event that the conditions of subparagraph (A) are not 
complied with, except as provided for in section 558; 
"(5) provides that the agreement entered into with recipients 
shall fully disclose the terms and conditions under which assist-
ance under this subpart is provided and under which repayment 
may be required, including— 
"(A) a description of the procedures required to be estab-
lished under paragraph (6); and 
"(B) a description of the appeals procedures required to 
be established under paragraph (7) under which a recipient 
may appeal a determination of noncompliance with any 
provision under this subpart; 
"(6) provides for procedures under which a recipient of assist-
ance received under this part who teaches for less than the 
period required under paragraph (4XA) will have the repa5rment 
requirements reduced or eliminated consistent with the provi-
sions of sections 557 and 558; 
"(7) provides for appeals procedures under which a recipient 
may appeal any determination of noncompliance with any 
provision under this part; 
"(8) provides assurances that the State agency shall make Disadvantaged 
particular efforts to attract students from low-income back- persons. 
grounds or who express a willingness or desire to teach in 
schools having less than average academic results or serving 
large numbers of economically disadvantaged students; and 
"(9) provides assurances that Congressional Teacher Scholar-
ships will be awarded without regard to sex, race, handicapping 
condition, creed, or economic background. 
. r,^ . 
"(c) SELECTION CRITERIA AND PROCEDURES.—The selection criteria 
and procedures to be used by the State shall reflect the present and 
projected teacher needs of the State, including the demand for and 
supply of early childhood and elementary teachers in the State, the 
demand for and supply of secondary teachers in the State, and the 
demand for teachers with training in specific academic disciplines in 
the State. 
"(d) SOUCITATION OF ViEWS ON SELECTION CRITERIA AND PROCE-
DURES.—In developing the selection criteria and procedures to be 
used by the State, the State shgJl solicit the views of State and local 
100 STAT. 1508 
PUBLIC LAW 99-498—OCT. 17, 1986 
educational agencies, private educational institutions, and other 
interested parties. Such views— 
"(1) shall be solicited by means of (A) written comments; and 
(B) publication of proposed selection criteria and procedures in 
final form for implementation; and 
"(2) may be solicited by means of (A) public hearings on the 
teaching needs of elementary and secondary schools in the State 
(including the number of new teachers needed, the expected 
supply of new teachers, and the shortages in the State of 
teachers with training in specific academic disciplines, includ-
ing early childhood education and development); or (B) such 
other methods as the State may determine to be appropriate to 
gather information on such needs. 
"AMOUNT AND DURATION OF AND RELATION TO OTHER ASSISTANCE 
20 use 1111c. 
"SEC. 554. (a) LIMITATIONS ON AMOUNT AND DURATION.—Subject to 
subsection (c), each Congressional Teacher Scholar shall receive a 
$5,000 scholarship for each academic year of postsecondary edu-
cation for study in preparation to become a pre-school, elementary 
or secondary teacher. No individual shall receive scholarship assist-
ance for more than 4 years of postsecondary education, as deter-
mined by the State agency. 
"(h) CONSIDERATION OF AWARD IN OTHER PROGRAMS.—Notwith-
standing the provisions of title IV of this Act, scholarship funds 
awarded pursuant to this part shall be considered in determining 
eligibility for student sissistance under title IV of this Act. 
"(c) ASSISTANCE NOT To EXCEED NEED.—Congressional Teacher 
Scholarship assistance awarded by the statewide panel established 
pursuant to section 555 to any individual in any given year, when 
added to assistance received under title IV of this Act, shall not 
exceed the cost of attendance, as defined in section 472 of this Act, at 
the institution the individual is attending. If the amount of the 
Congressional Teacher Scholarship assistance and assistance re-
ceived under title IV of this Act, exceeds the cost of attendance, the 
Congressional Teacher Scholarship shall be reduced by an amount 
equal to the amount by which the combined awards exceed the cost 
of attendance. 
|. ., 
"(d) 
ASSISTANCE NOT TO EXCEED COST OF ATTENDANCE.—No 
individual shall receive an award under the Congressional Teacher 
Scholarship established under this subpart, in any academic year, 
which exceeds the cost of attendance, as defined in section 472 of 
this Act, at the institution the individual is attending. 
SELECTION OF CONGRESSIONAL TEACHER SCHOLARS 
20 use iiiid. 
"SEC. 555. (a) SELECTION BY STATEWIDE PANELS.—Congressional 
Teacher Scholars shall be selected by a seven-member statewide 
panel appointed by the chief State elected official, acting in con-
sultation with the State educational agency, or by an existing grant 
agency or panel designated by the chief State elected official and 
approved by the Secretary of Education. The statewide panel shall 
be representative of school administrators, teachers, including pre-
school teachers, and parents. 
"(b) EUGIBILITY FOR SELECTION; SELECTION CRITERIA AND PROCE-
DURES.—Selections of Congressional Toacher Scholars shall be made 
from students who have graduated oi who are graduating from high 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1509 
school and who rank in the top 10 percent of their graduating class. 
The State educational agency shall make applications available to 
public and private nonprofit high schools in the State and in other 
locations convenient to applicants, parents, and others. The state-
wide panel shall develop criteria and procedures for the selection of 
Congressional Teacher Scholars. Such criteria may include the ap-
plicant's high school grade point average, involvement in extra-
curricular activities, financial need, and expression of interest in 
teaching as expressed in an essay written by the applicant. The 
panel may also require the applicant to furnish letters of rec-
ommendation from teachers and others. 
"SCHOLARSHIP CONDITIONS 
"SEC. 556. Recipients of scholarship assistance under this subpart 
20 use 11 lie. 
shall continue to receive such scholarship pajmients only during 
such periods that the State agency finds that the recipient is— 
"(1) enrolled as a full-time student in an accredited post-
secondary institution; 
"(2) pursuing a course of study leading to teacher certifi-
cation; and 
"(3) maintaining satisfactory progress as determined by the 
postsecondary institution the recipient is attending. 
"SCHOLARSHIP REPAYMENT PROVISIONS 
"SEC. 557. Recipients found by the State agency to be in non- 20 use iliif. 
compliance with the agreement entered into under section 553(bX4) 
of this subpart shall be required to repay a pro rata amount of the 
scholarship awards received, plus interest and, where applicable, 
reasonable collection fees, on a schedule and at a rate of interest to 
be prescribed by the Secretary by regulations issued pursuant to this 
subpart. 
"EXCEPTIONS TO REPAYMENT PROVISIONS 
"SEC. 558. (a) DEFERRAL DURING CERTAIN PERIODS.—A recipient 20 use iiiig. 
shall not be considered in violation of the agreement entered into 
pursuant to section 553(b)(4)(C) during any period in which the 
recipien'-— 
"(1) is pursuing a full-time course of study related to the field 
of teaching at an eligible institution; 
"(2) is serving, not in excess of 3 years, as a member of the 
armed services of the United States; 
"(3) is temporarily totally disabled for a period of time not to 
exceed 3 years as established by sworn affidavit of a qualified 
physician; 
"(4) is unable to secure emplojnnent for a period not to exceed 
12 months by reason of the care required by a spouse who is 
disabled; 
"(5) is seeking and unable to find full-time employment for a 
single period not to exceed 12 months; 
"(6) is seeking and unable to find full-time employment as a 
« • 
teacher in a public or private nonprofit pre-school, elementary 
or secondary school or a public or private nonprofit pre-school, 
education program; or 
100 STAT. 1510 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(7) satisfies the provisions of additional repayment excep-
tions that may be prescribed by the Secretary in regulations 
issued pursuant to this subpart. 
"(b) FORGIVENESS IF PERMANENTLY TOTALLY DISABLED.—A recipi-
ent shall be excused from repayment of any scholarship assistance 
received under this subpart if the recipient becomes permanently 
totally disabled as established by sworn affidavit of a qualified 
physician. 
"FEDERAL ADMINISTRATION OF STATE PROGRAMS; JUDICIAL REVIEW 
20 use iiiih. 
"SEC. 559. (a) DISAPPROVAL HEARING REQUIRED.—The Secretary 
shall not finally disapprove any application for a State program 
submitted under section 553, or any modification thereof, without 
9,f. 
first 
affording the State agency submitting the program reasonable 
notice and opportunity for a hearing. 
"(b) SUSPENSION OF ELIGIBIUTY.—Whenever the Secretary, after 
reasonable notice and opportunity for hearing to the State agency 
administering a State program approved under this subpart, finds— 
"(1) that the State program has been so changed that it no 
longer complies with the provisions of this subpart, or 
"(2) that in the administration of the program there is a 
failure to comply substantially with any such provisions, 
the Secretary shall notify such State agency that the State will not 
be regarded as eligible to participate in the program under this 
subpart until the Secretary is satisfied that there is no longer any 
such failure to comply. 
"(c) COURT REVIEW.—(1) If any State is dissatisfied with the 
Secretary's final action under subsection (b) (1) or (2), such State 
may appeal to the United States court of appeals for the circuit in 
which such State is located. The summons and notice of appeal may 
be served at any place in the United States. The Secretary shall 
forthwith certify and file in the court the transcript of the proceed-
ings and the record on which the action was based. 
"(2) The findings of fact by the Secretary, if supported by substan-
tial evidence, shall be conclusive; but the court, for good cause 
shown, may remand the case to the Secretary to take further 
evidence, and the Secretary may thereupon make new or modified 
findings of fact and may modify any previous action, and shall 
certify to the court the transcript and record of further proceedings. 
Such new or modified findings of fact shall likewise be conclusive if 
supported by substantial evidence. 
"(3) The court shall have jurisdiction to affirm the action of the 
Secretary or to set it aside, in whole or in part. The judgment of the 
court shall be subject to review by the Supreme Court of the United 
States upon certiorari or certification as provided in section 1254 of 
title 28, United States Code. 
T 
"SUBPART 2—CHRISTA MCAUUFFE FELLOWSHIP PROGRAM 
"DECLARATION OF PURPOSE; DESIGNATION 
,, 
20 use 1113. 
"SEC. 561. (a) PURPOSE.—It is the purpose of this subpart to 
establish a national fellowship program for outstanding teachers. 
"(b) DESIGNATION.—Individuals awarded fellowships under this 
subpart shall be known as 'Christa McAuliffe Fellows'. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1511 
USE OF FUNDS FOR FELLOWSHIPS AND ADMINISTRATION 
"SEC. 562. Funds appropriated for any fiscal year for fellowships 
to outstanding teachers under this subpart shall be used to award 
fellowships in accordance with the requirements of this subpart, 
except that not more than 2.5 percent of such funds shall be used for 
purposes of administering this subpart. 
20 u s e 1113a. 
CHRISTA MCAUUFFE FELLOWSHIPS 
"SEC. 563. (a) AWARD DISTRIBUTION AND AMOUNTS.—(1) Except as 
20 use iii3b. 
provided under paragraph (3), sums available for the purpose of this 
subpart shall be used to award one national teacher fellowship to a 
public or private school teacher teaching in each congressional 
district of each State, and in the District of Columbia, and the 
Commonwealth of Puerto Rico; and one such fellowship in Guam, 
the Virgin Islands, American Samoa, the Northern Mariana Islands, 
and the Trust Territory of the Pacific Islands. 
"(2) Fellowship awards may not exceed the average national 
salary of public school teachers in the most recent year for which 
satisfactory data are available, as determined by the Secretary. 
Christa McAuliffe teacher fellows may not receive an award for 2 
consecutive years. Subject to the repayment provisions of section 
566, Christa McAuliffe teacher fellows shall be required to return to 
a teaching position in their current school district or private school 
system for at least 2 years following the fellowship award. 
"(3) If the appropriation for this subpart under section 502(d) is 
not sufficient to provide the number of fellowships required by 
paragraph (1) at the level required under paragraph (2), the Sec-
retary shall determine and publish an alternative distribution of 
fellowships which will permit fellowship awards at that level and 
which is geographically equitable. The Secretary shall send a notice 
of such determination to each of the statewide panels established 
under section 564. 
"(b) USE OF AWARDS.—Christa McAuliffe teacher fellows may use 
such awards for such projects for improving education as the Sec-
retary may approve, including (1) sabbaticals for study or research 
directly associated with the objectives of this part, or academic 
improvement; (2) consultation with or assistance to other school 
districts or private school systems; (3) development of special innova-
tive programs; or (4) model teacher programs and staff development. 
"SELECTION OF CHRISTA MCAULIFFE TEACHER FELLOWSHIPS 
"SEC. 564. Recipients of Christa McAuliffe teacher fellowship in 20 use lli3c. 
each State shall be selected (in accordance with section 565) by a 
7-member statewide panel appointed by the chief State elected offi-
cial, acting in consultation with the State educational agency, or by 
an existing panel designated by the chief State elected official and 
approved by the Secretary. The statewide panel shall be representa-
tive of school administrators, teachers, parents, and institutions of 
higher education. 
EVALUATION OF APPUCATIONS 
"SEC. 565. (a) SUBMISSION TO AND REVIEW BY STATEWIDE PANEL.— 
An applicant for Christa McAuliffe teacher fellowship assistance 
shall submit a proposal for a project under section 563(b), and shall 
20 u s e 1113d. 
100 STAT. 1512 
PUBLIC LAW 99-498—OCT. 17, 1986 
indicate the extent to which the applicant wishes to continue cur-
rent teaching duties. The applicant shall submit such a proposal to 
the local education agency for comment prior to submission to the 
statewide panel (appointed under section 564) for the State within 
which the proposed project is to be conducted. In evaluating propos-
als, such statewide panel shall consult with the local education 
agency, requesting 2 recommendations from teaching peers; a rec-
ommendation from the principal; and a recommendation of the 
superintendent on the quality of the proposal and its benefit to 
education; and any other criteria for awarding fellowships as is 
considered appropriate by such statewide panel. Selection of fellows 
shall be made in accordance with regulations prescribed by the 
Secretary of Education. 
"(b) PuBuc ANNOUNCEMENT.—Announcement of awards shall be 
made in a public ceremony. 
"FELLOWSHIP REPAYMENT PROVISIONS 
20 use lli3e. 
"SEC. 566. Repajnnent of the award shall be made to the Federal 
Government in the case of fraud or gross noncompliance. 
"PART E—STATE TASK FORCES ON TEACHER TRAINING 
"STATE TASK FORCES ON TEACHER TRAINING 
20 use 1115. 
"SEC. 571. (a) IN GENERAL.—No institution of higher education or 
other entity in any State shall be eligible for assistance under this 
title for any fiscal year beginning on or after October 1, 1987, 
unless— 
"(1) the State educational agency has established a task force 
on teacher training in accordance with the requirements of 
subsections (b) and (c); or 
"(2) the Secretary waives the requirements of this section if 
the State educational agency has substantially complied with 
the requirements of paragraphs (1), (2), and (3) of subsection (b), 
and 
submits 
evidence 
to 
the 
Secretary 
showing 
such 
compliance. 
"(b) TASK FORCE.—The State educational agency, in consultation 
with the task force established under this section, shall be respon-
sible— 
"(1) for conducting a statewide assessment of the State's needs 
for recruiting, retaining, retraining, and improving 
the 
performance of, instructional and administrative personnel in 
pre-schools, elementary and secondary schools within the State; 
"(2) for developing plans to meet the needs identified pursu-
ant to paragraph (1); and 
"(3) for conducting such activities in cooperation with the 
State needs assessment required under section 208 of the Edu-
cation for Economic Security Act (20 U.S.C. 3968). 
"(c) MEMBERSHIP OF TASK FORCE.—A task force established under 
this section shall be composed of at least one representative of each 
of the following: 
"(1) The Governor of the State. 
..' 
' 
"(2) The chief State school officer. 
' 
'•''' ^
^ ' ' '^^^' " - . 
"(3) The State higher education executive officer. 
' '(4) The State board of education. 
-
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1513 
"(5) The deans of the schools or colleges of education within 
the State. 
"(6) The presidents of colleges and universities within the 
State. 
"(7) Pre-school, elementary and secondary school teachers. 
"(8) Elementary and secondary school administrators, includ-
ing local superintendents and principals. 
': ^s?? ' 
"(9) The State legislature. 
"(10) Private nonprofit pre-school, elementary and secondary 
education. 
"(d) ALTERNATIVE MEMBERSHIP.—Any previously existing State 
organization or entity whose membership is substantially the same 
as the membership required by subsection (c) may, with the ap-
proval of the State educational agency, £issume the responsibilities 
of the task force on teacher training under this section. 
"(e) LONG-RANGE PLANNING.—From the funds available to carry 
out this subpart, a State educational agency may apply to the 
Secretary for assistance in order to develop a long-range plan, in 
consultation with the task force established under this section. Such 
plan shall— 
"(1) assess the supply and determine the future needs of 
educators in the State, including early childhood education and 
development specialists; 
"(2) assess the ability of teacher training institutions, the 
State educational agency, and local educational agencies within 
the State to meet such needs; 
"(3) describe the steps being taken within the State to im-
prove the qualifications and performance of practicing and 
prospective educators and the availability of training resources 
for such educators; 
"(4) if determined to be appropriate by the State education 
agency, establish a program of competitive grants to local edu-
cational agencies, professional organizations, institutions of 
higher education, and consortia of such agencies and institu-
tions within the State that are allocated in accordance with 
specific criteria developed by the task force on teacher training; 
' •
• 
and 
"(5) provide for the performance of such other activities as are 
deemed appropriate to carry out purposes of this subpart. 
"(f) DISPOSITION OF FUNDS TO STATES.—Funds appropriated for this 
subpart shall be allocated among the States based on the number of 
children aged 5 through 17, inclusive, except that no State shall 
receive less than the greater of $10,000 or 0.01 percent of the 
amount so appropriated. 
"(g) STATE APPLICATIONS.—A State educational agency which de-
sires to obtain a grant under this subpart shall file an application 
with the Secretary which— 
"(1) describes the methods which will be used to insure active 
and continuing consultation with the task force; 
"(2) provides for timely public notice and public dissemination 
of the information collected and plans developed; and 
"(3) ensures that the State educational agency will keep such 
records and provide such information to the Secretary as may 
be required for fiscal audit and program evaluation, consistent 
with the responsibilities of the Secretary under this subpart.". 
100 STAT. 1514 
PUBLIC LAW 99-498—OCT. 17, 1986 
20 use 
(b) CONFORMING AMENDMENT.—The Human Services Reauthoriza-
4201-4206 
tion Act (Public Law 98-558) is amended by striking out title IX, 
note 
relating to leadership in educational administration development. 
SEC. 502. TAFT INSTITUTE. 
. . 
;^ 
n 
j . 
Section 1373 of the Education Amendments of 1980, relating to 
94 Stat. 1502. 
the Robert A. Taft Institute, is amended by inserting after "1985" a 
comma and the following: "$750,000 for the fiscal year 1986 and for 
each succeeding fiscal year ending prior to October 1,1988". 
TITLE VI—INTERNATIONAL EDUCATION PROGRAMS 
SEC. 601. FINDINGS AND PURPOSES. 
Section 601 of the Act is amended to read as follows: 
/ 
"FINDINGS AND PURPOSES 
20 use 1121. 
"SEC. 601. (a) The Congress finds that— 
"(1) the well-being of the United States, its economy and long-
range security, is dependent on the education and training of 
Americans in international and foreign language studies and on 
a strong research base in these aresis; 
"(2) knowledge of other countries and the ability to commu-
nicate in other languages is essential to the promotion of 
mutual understanding and cooperation among nations; and 
"(3) present and future generations of Americans must be 
afforded the opportunity to develop to the fullest extent possible 
their intellectual capacities in all areas of knowledge. 
"Ot)) It is the purpose of this part to assist in the development of 
knowledge, international study, resources and trained personnel, to 
stimulate the attainment of foreign language acquisition and flu-
ency, and to coordinate the programs of the Federal Government in 
the areas of foreign language and international studies and 
research.". 
SEC. 602. LANGUAGE AND AREA CENTERS. 
20 use 1122. 
(a) AUTHORITY TO MAKE GRANTS.—(1) Section 602(aXl) of the Act 
is amended to read as follows: 
"SEC. 602. (aXD The Secretary is authorized— 
"(A) to make grants to institutions of higher education, or 
combinations 
thereof, 
for 
the 
purpose 
of 
establishing, 
strengthening, and operating comprehensive language and area 
centers and programs; and 
"(B) to make grants to such institutions or combinations for 
the purpose of establishing, strengthening, and operating under-
graduate language and area centers and programs, 
which will be national resources for teaching of any modern foreign 
language, for instruction in fields needed to provide full understand-
ing of areas, regions, or countries in which such language is com-
monly used, for research and training in international studies, and 
the international and foreign language aspects of professional and 
other fields of study, and for instruction and research on issues in 
world affairs which concern one or more countries.". 
(2) Section 602(aX2) of the Act is amended by striking out "or 
contract". 
(3) Section 602(aX3) is amended by striking out "paragraph (1)" 
and inserting in lieu thereof "paragraph (IXA) . 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1515 
(b) STIPEND AND TRAVEL REQUIREMENTS.—Section 602 is further 
amended by striking out subsections (b) and (c) and inserting in lieu 
thereof the following: 
"(bXl)(A) The Secretary is authorized to make grants to institu-
tions of higher education or combinations of such institutions for the 
purpose of paying stipends to individuals undergoing advanced 
training in any center or program approved by the Secretary under 
this part. 
"(B) Stipend recipients shall be individuals who are engaged in a 
program of competency-based language training, in a program of 
competency-based training, or in a program developing competency-
based language training, in combination with area studies, inter-
national studies, or the international aspects of a professional 
studies program. 
"(C) Stipends awarded to graduate level recipients may include 
allowances for dependents and for travel for research and study in 
the United States and abroad. 
> 
"(2)(A) The Secretary is also authorized to award, on the basis of a 
national competition, stipends to students beginning their third year 
of graduate training. 
"(B) Stipend recipients shall be selected by a nationally recognized 
panel of scholars on the basis of exceptional performance (on a 
nationally referenced test, if available) in the specialty language and 
evidence of substantial multidisciplinary area training. 
"(C) Stipends may be held for up to a maximum 4 years contingent 
on periodic demonstration of a high level of language proficiency. 
^f siO 
"(D) Stipends may be used for continuation of studies at the 
institution where the recipient is currently enrolled and for the 
conduct of research and advanced language study abroad. 
"(3) The Secretary is not authorized to make awards under para-
graph (2) for any fiscal year unless the amount made available by 
grants under paragraph (1) for such fiscal year equals or exceeds the 
current services equivalent of the level of funding during fiscsd year 
1985 under paragraph (1). 
"(c) No funds may be expended under this part for undergraduate 
travel except in accordance with rules prescribed by the Secretary 
setting forth policies and procedures to assure that Federal funds 
made available for such travel are expended as part of a formal 
program of supervised study.". 
SEC. 603. FOREIGN LANGUAGE RESOURCE CENTERS. 
Section 603 of the Act is amended to read as follows: 
"LANGUAGE RESOURCE CENTERS 
"SEC. 603. (a) The Secretary is authorized to make grants to and Grants. 
enter into contracts with institutions of higher education, or com- S^^jc^^^ipo 
binations of such institutions, for the purpose of establishing, 
strengthening, and operating language training centers, which shall 
serve as resources to improve the capacity to teach and learn foreign 
languages effectively. Activities carried out by such centers may 
include— 
"(1) the conduct of research on new and improved teaching 
methods, including the use of advanced educational technology; 
-
"(2) the development of new teaching materials reflecting the 
use of such research in effective teaching strategies; 
100 STAT. 1516 
PUBLIC LAW 99-498—OCT. 17, 1986 
20 use 1124. 
Grants. 
Reports. 
jG 'r 
"(3) the development and application of proficiency testing 
. 
appropriate to an educational setting for use as a standard and 
comparable measurement of skill levels in all languages; 
"(4) the training of teachers in the administration and 
interpretation of proficiency tests, the use of effective teaching 
strategies, and the use of new technologies; 
"(5) the publication of instructional materials in the less 
commonly taught languages; and 
"(6) the widespread dissemination of research results, teach-
ing materials, and improved pedagogical strategies to others 
within the postsecondary education community. 
"(b) Grants under this section shall be made on such conditions as 
the Secretary determines to be necessary to carry out the provisions 
of this section.". 
SEC. 604. UNDERGRADUATE INTERNATIONAL STUDIES AND FOREIGN LAN-
GUAGE PROGRAMS. 
(a) CLARIFYING PROVISION.—The matter preceding clause (1) of 
section 604 of the Act is amended by striking out "comprehensive" 
each place it appears. 
(b) TYPE OF TRAINING.—Section 604(a)(7) of the Act is amended by 
inserting 
before 
"teacher" 
the following: 
"pre-service and 
in-service". 
(c) MODEL PROGRAMS.—Section 604 is further amended by re-
designating subsection (b) as subsection (c) and by inserting after 
subsection (a) the following new subsection: 
"(b)(1) The Secretary is also authorized to make grants to institu-
tions of higher education whose applications are approved under 
subsection (a) for the purpose of providing assistance to model 
programs designed to improve and expand foreign language studies 
at those institutions. Any institution of higher education desiring to 
receive a grant under this subsection shall submit an application to 
the Secretary at such time, in such form, and containing such 
information and assurances as the Secretary may require. 
"(2)(A) An institution of higher education shall not be eligible for 
a grant under this subsection for a fiscal year unless— 
"(i) the sum of the number of students enrolled at such 
institution in qualified postsecondary language courses on Octo-
ber 1 of that fiscal year exceeds 5 percent of the total number of 
students enrolled at such institution; and 
"(ii) such institution requires that each entering student have 
successfully completed at least 2 years of secondary school 
foreign language instruction or requires that each graduating 
student have earned 2 years of postsecondary credit in a foreign 
language (or have demonstrated equivalent competence in a 
foreign language). 
"(B) For the purpose of subparagraph (AXD, the total number of 
students enrolled in an institution shall be considered to be equal to 
the sum of (i) the number of full-time degree candidate students 
enrolled at the institution, and (ii) the number of part-time degree 
candidate students who are enrolled at the institution for an aca-
demic workload which is at least half the full-time academic work-
load, as determined by the institution in accordance with standards 
prescribed by the Secretary. 
"(3) As a condition for the award of any grant under this subsec-
tion, the Secretary may establish criteria for evaluating programs 
assisted with funds under this subsection and require an annual 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1517 
20 use 
1125-1127. 
report which evaluates the progress and proficiency of students in 
such programs.". 
SEC. 605. INTENSIVE SUMMER LANGUAGE INSTITUTES. 
Title VI of the Act is further amended— 
(1) by redesignating sections 605, 606, and 607 as sections 606, 
609, and 610, respectively; and 
(2) by inserting after section 604 the following new section: 
"INTENSIVE SUMMER LANGUAGE INSTITUTES 
"SEC. 605. (aXD The Secretary is authorized to make grants to 20 USC ll24a. 
institutions of higher education, or combinations of such institu-
tions, for the purpose of establishing and conducting intensive 
summer language institutes. 
"(2) Training authorized by this section shall be provided 
through— 
"(A) institutes designed to meet the needs for intensive lan-
guage training by advanced foreign language students; 
"(B) institutes designed to provide professional development 
and improve language instruction through pre-service and in-
service training for language teachers; or 
"(C) institutes that combine the purposes of subparagraphs 
(A) and (B). 
"(3) Grants made under this section may be used for— 
"(A) intensive training in languages critical to the national 
economic and poUtical future; 
"(B) training in neglected languages; and 
' 
^
* 
"(C) stipends for students and faculty attending the institutes 
authorized by this section. 
"(4) Institutes supported under this section may provide instruc-
tion on a full-time or part-time basis to supplement instruction not 
fully available in centers supported under section 602. 
"(b) Grants made under this section shall be awarded on the basis 
of recommendations made by peer review panels composed of 
broadly representative professionals.". 
SEC. 606. RESEARCH; STUDIES; ANNUAL REPORT. 
(a) RESEARCH AND STUDIES.—Section 606 (as redesignated by sec- 20 use 1125. 
tion 605 of this Act) is amended— 
(1) by striking out "and part N of title III of the Elementary 
and Secondary Education Act of 1965"; 
(2) by striking out "and" at the end of paragraph (2); 
(3) by redesignating par£igraph (3) as paragraph (4); 
J i ^aj f
;
-
(4) by inserting after paragraph (2) the following new 
paragraph: 
"(3) the application of proficiency tests and standards across 
all areas of foreign language instruction and classroom use; 
and"; and 
(5) by inserting "and publication" after "development" in 
paragraph (4) (as redesignated by this section). 
(b) (DoNFORMiNG AMENDMENT.—Subscction (b) of such section is 
amended to read as follows: 
"(b) The Secretary shall prepare and publish an annual report Reports. 
listing the books and research materials produced with assistance 
under this title.". 
100 STAT. 1518 
PUBLIC LAW 99-498—OCT. 17, 1986 
SEC. 607. PERIODICALS PUBLISHED OUTSIDE THE UNITED STATES. 
Title VI of the Act is further amended by inserting after section 
606 (as redesignated by section 605 of this Act) the following new 
section: 
' 
* (
*
S 
'V 
"PERIODICALS P U B U S H E D OUTSIDE THE UNITED STATES 
20 use 1125a. 
"SEC. 607. (a) In addition to the amount authorized to be appro-
priated by section 609, there are authorized to be appropriated 
$1,000,000 for fiscal year 1987, and such sums as may be necessary 
for the 4 succeeding ^scal years to provide assistance for the acquisi-
tion of, and provision of access to, periodicals published outside the 
United States. 
Grants. 
"(b) From the amount appropriated under subsection (a) for any 
fiscal year, the Secretary shall make grants to institutions of higher 
education or public or nonprofit private library institutions or con-
sortia of such institutions for the following purposes: 
"(1) to acquire periodicals published outside the United States 
which are not commonly held by American academic libraries 
and which are of scholarly or research importance; 
"(2) to maintain current bibliographic information on periodi-
cals thus acquired in machine-readable form and to enter such 
information into one or more of the widely available biblio-
graphic data bases; 
"(3) to preserve such periodicals; and 
"(4) to make such periodicals available to researchers and 
scholars. 
Libraries. 
"(c) The Secretary shall approve as a recipient of a grant under 
this section only an institution or consortium which has an estab-
lished library or consortium of libraries with collection strengths in 
either specific geographical areas of the world or particular fields or 
issues in world affairs which concern one or more countries, or both, 
and which demonstrates a commitment to share the resources of the 
collection. 
"(d) Nothing in this section shall be considered to amend, affect, 
or define the provisions of title 17, United States Code, relating to 
copyright.". 
SEC. 608. SELECTION OF GRANT RECIPIENTS. 
= : ? :; 
Title VI of the Act is further amended by inserting after section 
607 (as added by section 607 of this Act) the following new section: 
SELECTION OF GRANT RECIPIENTS 
20 use 1125b. 
"SEC. 608. (a) The Secretary shall award grants under section 602 
competitively on the basis of criteria that separately, but not less 
rigorously, evaluate the applications for comprehensive and under-
graduate language and area centers and programs. 
"(b) The Secretary shall set criteria for grants awarded under 
section 602 by which a determination of excellence shall be made to 
meet the differing objectives of graduate and undergraduate institu-
tions. 
"(c) The Secretary shall, to the extent practicable, award grants 
under this part (other than section 602(a)(1)) in such manner as to 
achieve an equitable distribution of assistance throughout the 
Nation, based on the merit of a proposal with peer review by broadly 
representative professionals.". 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1519 
SEC. 609. REAUTHORIZATION OF PART A. 
Section 610 of the Act (as redesignated by section 605 of this Act) 
is amended to read as follows: 
"AUTHORIZATION OF APPROPRIATIONS 
"SEC. 610. There are authorized to be appropriated to carry out 
20 USC 1127. 
this part $49,000,000 for fiscal year 1987, and such sums as may be 
necessary for the 4 succeeding fiscal years.". 
SEC. 610. BUSINESS AND INTERNATIONAL EDUCATION PROGRAMS. 
Section 611(a)(1) of the Act is amended by inserting "and edu- 
20 USC 1130. 
cational" after "skills in the business". 
SEC. 611. OVERSEAS INTERNSHIPS. 
Section 612(b) of the Act is amended— 
20 use 1130a. 
(1) by striking out "and" at the end of paragraph (8); 
I 
(2) by striking out the period at the end of paragraph (9) and 
inserting in lieu thereof ; and"; and 
(3) by inserting after paragraph (9) the following new para-
graph: 
"(10) the establishment of internships overseas to enable 
foreign language students to develop their foreign language 
skills and knowledge of foreign cultures and societies.". 
SEC. 612. REAUTHORIZATION OF PART B. 
Section 613 of the Act is amended to read as follows: 
"AUTHORIZATION OF APPROPRIATIONS 
"SEC. 613. There are authorized to be appropriated to carry out 
20 use ii30b. 
this part $5,000,000 for fiscal year 1987, and such sums as may be 
necessary for the 4 succeeding fiscal years.". 
SEC. 613. ADVISORY BOARD. 
Section 621 of the Act is amended to read as follows: 
ADVISORY BOARD 
"SEC. 621. (a) Not less than 2 times each year the Secretary shall 
convene an advisory board on the conduct of programs under this 
title. The Advisory Board shall consist of— 
"(1) 5 members selected by the Secretary from among mem-
bers of the postsecondary educational community, at least two 
of whom shall be considered by their peers to be specialists in 
one or more fields of language, area, or international studies; 
"(2) 2 members selected by the Secretary from among mem-
bers of the public; and 
"(3) 2 members selected by the Secretary from among rep-
resentatives of the business community. 
"(b) The Secretary may consult with, or include as ad hoc ex 
officio participants in Advisory Board meetings, a representative 
from any appropriate executive agency. 
"(c) The Advisory Board shall advise the Secretary on— 
"(1) any geographic areas of special concern to the United 
States; 
"(2) innovative approaches which may help to fulfill the 
purposes of this title; 
20 use 1131. 
100 STAT. 1520 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(3) changes which should be made in the operation of pro-
grams under this part to ensure that the attention of scholars is 
attracted to problems of critical concern to United States inter-
national relations; 
"(4) emerging trends within various segments (pre-college, 
undergraduate, graduate, and postgraduate) of the inter-
:; 
j J <: 
national education community; 
"(5) administrative and staffing requirements of international 
education programs in the Department; and 
"(6) special needs with regard to the programs operated under 
part B. 
;
)
c 
"(d) The Advisory Board shall advise the Secretary and the Con-
gress on adequate budget levels for parts A and B of this title.". 
SEC. 614. DEFINITIONS. 
20 use 1132. 
Section 622 of the Act is amended— 
" 
(1) by striking out "and" at the end of paragraph (3); 
(2) by striking out the period at the end of paragraph (4) and 
inserting in lieu thereof a semicolon; and 
(3) by inserting at the end thereof the following: 
"(5) the term 'comprehensive language and area center' 
means an administrative unit of a university that contributes 
significantly to the national interest in advanced research and 
scholarship, employs a critical mass of scholars in diverse dis-
ciplines related to a geographic concentration, offers intensive 
language training in languages of its area specialization, main-
tains important library collections related to the area, and 
makes training available in language and area studies to a 
graduate, postgraduate, and undergraduate clientele; and 
"(6) the term 'undergraduate language and area center' 
' 
means an administrative unit of an institution of higher edu-
cation, including but not limited to 4-year colleges, that contrib-
utes significantly to the national interest through the education 
and training of students who matriculate into advanced lan-
guage an area studies programs, professional school programs, 
or incorporates substantial international and foreign language 
content into baccalaureate degree programs, engages in re-
search, curriculum development and community outreach 
activities designed to broaden international and foreign lan-
guage knowledge, employs faculty with strong language, area, 
and international studies credentials, maintains library hold-
ings, including basic reference works, journals, and works in 
translation, and makes training available predominantly to 
undergraduate students.". 
ic 
TITLE VII—CONSTRUCTION AND RENOVATION 
SEC. 701. REVISION OF TITLE VII. 
Title VII of the Act is amended to read as follows: 
"TITLE VII—CONSTRUCTION, RECONSTRUCTION, AND 
RENOVATION OF ACADEMIC FACILITIES 
r-'-i-j-'f. .' 
" P U R P O S E S 
-'?•>'"-'S '. 
20 USCll32a. 
"SEC. 701. (a) IN GENERAL.—The Secretary shall carry out pro-
grams of financial assistance to institutions of higher education and 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1521 
to higher education building agencies for the construction, re-
construction, or renovation of academic facilities and the acquisition 
and maintenance of special research and instructional instrumenta-
tion and equipment if the primary purpose of such assistance is to 
enable such institutions— 
"(1) to bring their facilities into conformity with the require-
ments of— 
"(A) the Act of August 12, 1968, commonly known as the 
Architectural Barriers Act of 1968; 
"(B) section 504 of the Rehabilitation Act of 1973; 
"(C) environmental protection or health and safety pro-
grams mandated by Federal, State, or local law, if such 
requirements were not in effect at the time such facilities 
were constructed; or 
"(D) hazardous waste disposal, treatment, and storage 
' 
"'• 
requirements mandated by the Resource Conservation and 
Recovery Act of 1976, or similar State statutes; 
"(2) to more efficiently use available energy resources, espe-
cially coal, solar power, and other renewable energy resources; 
"(3) to detect, remove, or otherwise contain asbestos hazards 
in academic and other facilities used by students, in accordance 
with regulations prescribed by the Secretary; 
"(4) to construct, reconstruct, or renovate the Nation's aca-
demic research and instructional instrumentation and facilities, 
including libraries, and to acquire and maintain special re-
search and instructional instrumentation and equipment; 
"(5) to provide facilities for advanced skill training programs 
that relate to emerging technologies and skill needs; 
"(6) with unusual increases in enrollment or with significant 
internal programmatic enrollment shifts (according to data and 
criteria established by the Secretary) to construct, reconstruct, 
or renovate their facilities; or 
"(7) to preserve significant architecture. 
"(b) PRIORITY ON RENOVATION.—In the awarding of grants under 
this title, priority shall be given to projects involving the renovation 
of facilities. 
"APPROPRIATIONS AUTHORIZED 
"SEC. 702. (a) PARTS A AND B.—There are authorized to be appro-
priated— 
"(1) $15,000,000 for part A for fiscal year 1987, 
"(2) $10,000,000 for part B for such fiscal year, and 
"(3) such sums as may be necessary for parts A and B for each 
of the 4 succeeding fiscal years, 
except that no funds may be appropriated for parts A and B for any 
such fiscal year unless at least $20,000,000 is appropriated for part E 
of this title for such fiscal year. 
"(b) OTHER PROGRAMS.—There are authorized to be appro-
priated— 
"(1) $25,000,000 for fiscal year 1987 and such sums as may be 
necessary for each of the 4 succeeding fiscal years for part C; 
"(2) $25,000,000 for fiscal year 1987 and such sums as may be 
necessary for each of the 4 succeeding fiscal years for part D; 
and 
"(3) $20,000,000 for fiscal year 1987 and such sums as may be 
necessary for each of the 4 succeeding fiscal years for part E. 
42 use 4151 
note. 
29 use 794. 
42 use 6901 
note. 
Energy. 
Asbestos. 
Libraries. 
Historic 
preservation. 
20 use 1132a-l. 
100 STAT. 1522 
PUBLIC LAW 99-498—OCT. 17, 1986 
"PART A—GRANTS FOR THE CONSTRUCTION, RECONSTRUCTION, AND 
RENOVATION OF UNDERGRADUATE ACADEMIC FACILITIES 
"STATE PLAN 
20 use 1132b. 
"SEC. 711. (a) SUBMISSION AND CONTENTS OF PLAN.—Any State 
desiring to participate in the grant program authorized by this part 
shall have an agreement pursuant to section 1203 and submit 
annually to the Secretary, through the State agency designated in 
such agreement, a State plan which shall— 
! 
"(1) provide that the plan shall be administered by the State 
entity having an agreement under section 1203; 
"(2) set forth objective standards and methods which are 
consistent with basic criteria established under section 712, 
for— 
"(A) determining the relative priorities of eligible projects 
submitted by institutions of higher education within the 
State, and 
"(B) certifying the Federal share of the cost of each 
^ 
project; 
' ' 
"(3) provide for every applicant an opportunity for a hearing 
before the State agency regarding the priority assigned to such 
,, 
project, or any other decision by the State agency adversely 
' 
affecting such applicant; and 
"(4) provide for accounting procedures necessary to assure 
proper disbursement of Federal funds. 
"(b) HEARING REQUIRED BEFORE DISAPPROVAL.—The Secretary 
shall not disapprove any State plan, or modification thereof, without 
first affording the State agency reasonable notice and opportunity 
for a hearing. 
"(c) SUSPENSION FOR NONCOMPUANCE.—Whenever the Secretary 
finds that the State plan substantially fails to comply with this 
section, the Secretary shall notify the State that it is ineligible to 
participate in the program under this part until a determination is 
made that there is no longer a failure to comply. 
State and local 
governments. 
Regulations. 
20 u s e 1132b-l. 
State and local 
governments. 
Grants. 
20 u s e 1132b-2. 
BASIC CRITERIA 
"
^ 
M 
"SEC. 712. (a) SECRETARY To PRESCRIBE CRITERIA.—The Secretary 
shall, by regulation, prescribe basic criteria for the consideration of 
State plans which ensure— 
"(1) flexibility for States to accommodate the varied needs of 
institutions in the States; 
"(2) consideration of the degree to which applicant institu-
tions are effectively using existing facilities; and 
"(3) that the Federal share shall not exceed 50 percent of the 
development costs of a project. 
"(b) RULEMAKING PROCEDURES REQUIRED.—Section 553 of title 5, 
United States Code, shall apply to the prescription of regulations 
under this section. 
"ALLOTMENT OF FUNDS 
"SEC. 713. (a) USE FOR PUBUC COMMUNITY COLLEGES AND TECH-
NICAL INSTITUTES; OTHERS.—From the sums appropriated pursuant 
to section 702 to carry out the purposes of this part, not less than 24 
percent shall be allotted to States under subsection (b) for public 
community colleges and public technical institutes. The remainder 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1523 
of such sums shall be allotted to States under subsection (c) for all 
other institutions of higher education. 
"(b) ALLOTMENT FOR PUBLIC COMMUNITY COLLEGES AND TECHNICAL 
INSTITUTES.—(1) For the purpose of making grants to public commu-
nity colleges and public technical institutes, the Secretary shall allot 
to each State an amount which bears the same ratio to the amount 
available for allotment under this subsection as the product o
f
— 
"(A) the number of persons in the State who have graduated 
from high school or received an equivalent certificate during 
the previous school year, and 
"(B) the State's allotment ratio, 
bears to the sum of the corresponding products for all the States. 
"(2)(A) Except as provided in subparagraph (B), the allotment 
ratio shall be 1.00 less the product o
f
— 
H.f. 
"(i) 0.50, and 
"(ii) the quotient obtained by dividing the income per person 
for the State by the income per person for all States (not 
including Puerto Rico, the Virgin Islands, American Samoa, the 
Trust Territory of the Pacific Islands, and Guam). 
"(B) Notwithstanding subparagraph (A)— 
r: 
"(i) the allotment ratio shall in no case be less than 0.33 1/3 or 
more than 0.66 2/3; 
t 
"(ii) the allotment ratio for Puerto Rico, the Virgin Islands, 
I 
American Samoa, the Trust Territory of the Pacific Islands, and 
Guam shall be 0.66 2/3; and 
"(iii) the allotment ratio of any State shall be 0.50 for any 
fiscal year if the Secretary finds that the cost of school construc-
tion in such State exceeds twice the median of such costs in all 
the States as determined by the Secretary on the basis of 
statistics and data as the Secretary shall deem adequate and 
appropriate. 
"(C) Allotment ratios shall be promulgated annually by the Sec-
retary on the basis of the average personal income in the State and 
in all the States for the three most recent consecutive calendar 
years for which data are available from the Department of Com-
merce. 
"(c) ALLOTMENT FOR OTHER INSTITUTIONS.—For the purpose of 
making grants to all other institutions of higher education, the 
Secretary shall allot to each State— 
"(1) an amount which bears the same ratio to 50 percent of 
the amount available for allotment under this subsection as the 
number of students enrolled in institutions of higher education 
in such State bears to the number of students so enrolled in all 
States; and 
"(2) an amount which bears the same ratio to 50 percent of 
the amount available for allotment under this subsection as the 
number of students enrolled in grades 9 through 12 of schools in 
such State bears to the total number of students so enrolled in 
all the States. 
"(d) AGGREGATE LIMITS AND RATABLE REDUCTIONS.—The aggregate 
amount allotted to any State under subsections (b) and (c) for any 
fiscal year shall not be less than $100,000. If the sums appropriated 
pursuant to section 702 are not sufficient to make payments to each 
State, then the amount of each State's allotment shall be ratably 
reduced. 
"(e) REALLOCATION.—(1) Any portion of a State's allotment under 
subsections (b) and (c) for any fiscal year for which applications from 
Puerto Rico. 
Virgin Islands. 
American 
Samoa. 
Trust Territory 
of the Pacific 
Islands. 
Guam. 
71-19A 0 -
- 15 : QL. 3 Part2 
100 STAT. 1524 
PUBLIC LAW 99-498—OCT. 17, 1986 
qualified institutions have not been received by the State agency 
prior to January 1 of such fiscal year shall, by request, be available 
for payment of the Federal share of cost of other approved projects. 
"(2) Amounts allotted under this section for any fiscal year which 
are not used by the close of the fiscal year shall be reallotted by the 
Secretary among the States which are able to use the funds without 
delay during the next fiscal year. 
"(f) 
USE FOR CONSTRUCTION, RECONSTRUCTION, RENOVATION.— 
Funds available under this part may be used for construction, 
reconstruction, or renovation of undergraduate facilities and com-
bined graduate and undergraduate facilities. 
"(g) USE FOR MAINTENANCE.—In addition, an amount less than or 
equal to 10 percent of that portion of an award granted under this 
part which is allotted by the recipient to meet costs of— 
"(1) research or instructional instrumentation and equip-
ment, and 
"(2) equipment and structural changes necessary to ensure 
Jut' the proper functioning of such research or instructional 
instrumentation and equipment, 
may be allocated by the recipient for maintenance of equipment and 
changes described in paragraphs (1) and (2). Part or all of this 
percentage may also be applied to costs of upgrading such equip-
ment and structural changes within three years of the date of initial 
s 
use, if the recipient deems such upgrading essential to the continued 
utility (usefulness) of such research or instructional instrumentation 
and equipment. 
"PART B—GRANTS FOR CONSTRUCTION, RECONSTRUCTION, AND 
RENOVATION OF GRADUATE ACADEMIC FACIUTIES 
"GRANTS 
20 use 1132c. 
"SEC. 721. (a) GRANT TO INSTITUTIONS; STATE LIMITATION.—(1) 
Funds available for this part shall be used by the Secretary to make 
grants to graduate institutions of higher education whose applica-
tions for assistance are consistent with the objectives of this title. 
"(2) The total payment for any fiscal year made to institutions of 
higher education in any State shall not exceed 12.5 percent of sums 
appropriated for this part. 
"(b) PEER REVIEW REQUIRED.—In making grants under this sec-
tion, the Secretary shall utilize a national peer review panel. The 
National Peer Review Panel shall be broadly representative of all 
types and cleisses of institutions of higher education in the United 
States. Such panel shall make recommendations to the Secretary 
based on their assessment of^ 
"(1) the effectiveness of the program in the proposed use of 
Federal assistance; and 
in 
"(2) the extent to which the receipt of the grant will assist the 
institution in overcoming deficiencies in existing equipment and 
facilities. 
"(c) COST LIMITATIONS.—The amount of the grant shall not exceed 
50 percent of the development cost of the project. No funds or 
resources provided through Federal programs shall be used to meet 
the institution's share of the program supported under this section. 
"(d) USE FOR MAINTENANCE.—An amount less than or equal to 10 
percent of that portion of an award granted under this part which is 
allotted by the recipient to meet costs o
f
— 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1525 
"(1) research or instructional instrumentation and equip-
ment, and 
"(2) equipment and structural changes necessary to ensure 
;/ is ,/c.JOL 
the proper functioning of such research or instructional 
instrumentation and equipment, 
may be allocated by the recipient for maintenance of equipment and 
changes described in paragraphs (1) and (2). Part or all of this 
percentage may also be applied to costs of upgrading such equip-
ment and structural changes within three years of the date of initial 
use, if the recipient deems such upgrading essential to the continued 
K i tsif 7#55! 
utility (usefulness) of such research or instructional instrumentation 
and equipment. 
* 
' 
) 
"PART C—LOANS FOR CONSTRUCTION, RECONSTRUCTION, AND 
- 
RENOVATION OF ACADEMIC FACIUTIES 
"EUGIBIUTY CONDITIONS, AMOUNTS, AND TERMS 
"SEC. 731, (a) SELECTION OF RECIPIENTS.—From the sums available 
20 use ll32d. 
for this part, the Secretary shall make and insure loans to institu-
tions of higher education and to higher education building agencies 
for programs consistent with the purposes of this title. No loan shall 
be made unless the Secretary finds that— 
"(1) not less than 20 percent of the development cost of the 
project will be financed from non-Federal sources; 
"(2) the applicant is unable to secure the loan from other 
sources upon terms and conditions equally as favorable as those 
applicable to loans under this part; 
"(3) the project will be undertaken in an economical manner; 
and 
"(4) for any project with regard to an infirmary or other 
outpatient care facility for students and institutional personnel, 
gissistance will not be provided under part F of this title. 
"(b) TERMS OF LOANS.—Loans shall be repaid within 50 years and 
'-
shall bear interest at (1) a rate annually determined by the Sec- 
^ 
retary which shall be not more than one-quarter of 1 percentage 
point above the average annual interest rate on all interest-bearing 
obligations of the United States forming a part of the public debt as 
computed at the end of the preceding fiscal year, adjusted to the 
nearest one-eighth of 1 percent, or (2) the rate of 5.5 percent per 
year, whichever is less. 
^ i^u i . 
"(c) USE FOR MAINTENANCE.—An amount less than or equal to 10 
percent of that portion of a loan granted under this part which is 
allotted by the recipient to meet costs of— 
"(1) research or instructional instrumentation and equip-
ment, and 
"(2) equipment and structural changes necessary to ensure 
the proper functioning of such research or instructional 
instrumentation and equipment, 
may be allocated by the recipient for maintenance of equipment and 
changes described in paragraphs (1) and (2). Part or all of this 
percentage may also be applied to costs of upgrading such equip-
ment and structural changes within three years of the date of initial 
use, if the recipient deems such upgrading essential to the continued 
utility (usefulness) of such research or instructional instrumentation 
and equipment. 
100 STAT. 1526 
PUBLIC LAW 99-498—OCT. 17, 1986 
' 
'- ' 
'* 
GENERAL PROVISIONS FOR LOAN PROGRAM 
20 use ii32d-i. 
"SEC. 732. (a) CONCLUSIVENESS OF SECRETARY'S TRANSACTIONS.— 
Financial transactions of the Secretary, except with respect to 
administrative expenses, shall be final and conclusive on all officers 
of the Government and shall not be reviewable by any court. 
"(b) GENERAL AUTHORITY.—In the performance of, and with re-
spect to, the functions vested in the Secretary by this part, the 
Secretary may— 
Regulations. 
"(1) prescribe such rules and regulations as may be necessary 
to carry out the purposes of this part; 
Courts, U.S. 
"(2) sue and be sued in any court of record of a State having 
general jurisdiction or in any district court of the United States, 
and such district courts shall have jurisdiction of civil actions 
arising under this part without regard to the amount in con-
troversy, and any action instituted under this subsection by or 
against the Secretary shall survive notwithstanding any change 
in the person occupying the office of the Secretary or any 
;.;f 
- ' ly. 
vacancy in such office; but no attachment, injunction, garnish-
ment, or other similar process, mesne or final, shall be issued 
against the Secretary or property under his control, and noth-
ing herein shall be construed to except litigation arising out of 
activities under this part from the application of sections 507(b) 
and 517 and 2679 of title 28, United States Code; 
"(3) foreclose on any property and bid for and purchase at any 
foreclosure, or any other sale, any property in connection with 
which the Secretary has made a loan pursuant to this part; in 
the event of such an acquisition, notwithstanding any other 
provisions of law relating to the acquisition, handling, or dis-
posal of real property by the United States, the Secretary may 
complete, administer, remodel and convert, dispose of, lease, 
and otherwise deal with, such property; except that (A) such 
action shall not preclude any other action by the Secretary to 
State and local 
recover any deficiency in the amounts loaned, and (B) any such 
governments. 
acquisition of real property shall not deprive any State or 
political subdivision thereof of its civil or criminal jurisdiction 
in and over such property or impair the civil rights under the 
: 
State or local laws of the inhabitants on such property; 
"(4) sell, exchange, or lease real or personal property and 
securities or obligations; 
Contracts. 
"(5) modify, with respect to the rate of interest, the time of 
. 
payment of principal, interest, security, or any other term of 
^ 
any contract or agreement to which the Secretary is a party, 
including— 
"(A) granting a moratorium on the repayment of prin-
cipal or interest to a party temporarily unable to make such 
repayment without undue financial hardship provided the 
applicant files, and the Secretary approves, a plan to make 
repayment; and 
"(B) granting to a borrower of a loan made before 
October 1, 1986, the option of repaying the loan at a dis-
count computed in accordance with subsection (c) if the 
Secretary has received satisfactory assurances that the 
facilities financed with the loan will continue to be used for 
purposes related to the educational institution for the origi-
nal term of the loan, and the prepayment is (i) made from 
non-Federal sources, (ii) not derived from proceeds of obliga-
:'M}k.< 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1527 
tions the income of which is exempt from taxation under 
the Internal Revenue Code of 1954, (iii) made on a loan that 
26 USC l et seq. 
has been outstanding for at least 5 years, and (iv) is made 
prior to October 1, 1991; and 
"(6) include in any contract such other covenants, conditions. Contracts. 
'• 
or provisions necessary to ensure that the purposes of this title 
will be achieved. 
"(c) COMPUTATION OF ALLOWABLE DISCOUNTS.—The Secretary shall 
compute the discount which may be offered to a borrower as an 
inducement to early repayment under subsection (b)(5) in an amount 
determined by the Secretary to be in the best financial interests of 
the Government, taking into account the yield on outstanding 
marketable obligations of the United States having maturities com-
parable to the remaining term of such loan. 
"(d) NONDISCRIMINATION BETWEEN BORROWERS IN OFFERING DIS-
COUNTED PREPAYMENT.—(1) If the Secretary offers a discount as an 
inducement to early repayment under subsection (b)(5), such offer 
shall be available without regard to whether the borrower is delin-
quent or in default on the loan on or before October 1, 1986, but the 
Secretary shall refuse to make such offer to a borrower that be-
comes delinquent or goes into default after that date. 
"(2) The discount offered shall apply, in the case of a borrower 
that complies with paragraph (1), to the entire amount outstanding 
on the loan (including any amount owed with respect to payments 
that are overdue). 
REVOLVING LOAN AND INSURANCE FUND 
"SEC. 733. (a) ESTABLISHMENT.—There is created within the Treas- 20 USC ll32d-2. 
ury a revolving loan fund for the purpose of making and insuring 
loans under this part (hereafter referred to as the 'fund') which shall 
be available to the Secretary without fiscal year limitation. The 
total of any loans made from the fund in any fiscal year shall not 
exceed limitations specified in appropriations Acts. 
"(b) MANAGEMENT OF FUND.—(1) The Secretary shall transfer to 
the fund appropriations provided under section 702 to provide cap-
ital for making loans. Interest and principal payments on loans, and 
any other moneys, property, or assets derived from activities under 
this part shall be deposited in the fund. 
"(2) All loans, expenses, and payments pursuant to operation of 
this part shall be paid from the fund, including expenses and 
payments in connection with sale, pursuant to section 302(c) of the 
Federal National Mortgage Association Charter Act, of participa- 12 USC 1717. 
tions in obligations acquired under this part. At the close of each 
fiscal year, the Secretary shall pay interest on the cumulative 
amount of funds paid out for loans under this part less the average 
undisbursed cash balance in the fund during the year. The interest 
rate shall be determined by the Secretary of the Treasury, taking 
into consideration the average market yield on outstanding Treas-
ury obligations of maturity comparable to the average maturity of 
loans made from the fund during the month preceding each fiscal 
year. Interest payments may be deferred with the approval of the 
Secretary of the Treasury, but interest payments so deferred shall 
themselves bear interest. If the Secretary determines that moneys 
in the fund exceed the present and prospective needs of the fund, 
the excess may be transferred to the general fund of the Treasury. 
100 STAT. 1528 
PUBLIC LAW 99-498—OCT. 17, 1986 
. . . 
; j 
1 
'PART D—GRANTS TO PAY INTEREST ON DEBT 
'' 
', 
" A N N U A L INTEREST G R A N T S 
> ••'<•'•• ^f;.' 
20 use li32e. 
"SEC. 741. (a) GRANT AUTHORITY.—To assist institutions of higher 
education and higher education building agencies in reducing the 
cost of borrowing from other sources for projects under this part, the 
Secretary may make annual interest grants to such institutions and 
agencies with respect to any project made over a fixed period not 
exceeding 40 years, and provision for the grants shall be embodied 
in the contract guaranteeing their payment. Grants shall not be 
greater than the difference between (1) the average annual debt 
service which would be required to be paid during the life of the loan 
on the amount borrowed from other sources for the construction of 
such facilities, and (2) the average annual debt service which the 
institution or agency would have been required to pay during the 
life of the loan if the applicable interest rate had been determined 
by the Secretary in accordance with section 731(b). 
"flb) LIMITS ON GRANTS.—The total amount of annual interest 
grants which may be paid to institutions of higher education and 
higher education building agencies in any year pursuant to con-
tracts entered into for such year under this section shall not exceed 
$13,500,000. 
"(c) STATE ALLOCATION LIMITS.—The total payment for any fiscal 
year made to institutions of higher education and higher education 
building agencies in any State shall not exceed 12.5 percent of sums 
appropriated for this section. 
"(d) REQUIREMENTS FOR GRANTS.—No annual interest grant shall 
5?-r£8ii i u 
^® made unless (1) assurance is provided that not less than 10 
percent of the costs of the project will be financed from non-Federal 
sources, (2) the applicant is unable to secure a loan from other 
sources upon terms and conditions as favorable as those applicable 
to loans under this title, and (3) the project will be undertaken in an 
economical manner. Loans for which an interest grant is made shall, 
for purposes of this section only, not be considered financing from a 
non-Federal source. 
"PART E—COLLEGE CONSTRUCTION LOAN INSURANCE ASSOCIATION 
, 
"CONGRESSIONAL DECLARATION OF PURPOSE; DEFINITION; 
k 
.> 
INCORPORATION 
i 
20 use ii32f. 
"SEC. 751. (a) PURPOSE.—The Congress hereby declares that it is 
the purpose of this part to authorize participation of the United 
States Government and the Student Loan Marketing Association in 
a private, for profit corporation to be known as the College Construc-
tion Loan Insurance Association (hereinafter referred to as the 
'Corporation') which will, directly or indirectly, alone or in 
collaboration with others— 
"(1) guarantee, insure, and reinsure bonds, debentures, notes, 
* 
evidences of debt, loans, and interests therein, the proceeds of 
* 
which are to be used for an education facilities purpose; 
• 
"(2) guarantee and insure leases of personal, real, or mixed 
' 
property to be used for an education facilities purpose; and 
* 
"(3) issue letters of credit and undertake obligations and 
commitments as the Corporation deems necessary to carry out 
the purposes described in paragraphs (1) and (2). 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1529 
"(b) STATUS AS NON-GOVERNMENTAL ENTITY.—The Corporation 
shall not be an agency, instrumentality, or establishment of the 
United States Government and shall not be a 'Government corpora-
tion' nor a 'Government controlled corporation' as defined in section 
103 of title 5, United States Code. No action under section 1491 of 
title 28, United States Code (commonly known as the Tucker Act) 
shall be allowable against the United States based on the actions of 
the Corporation. 
"(c) CORPORATE POWERS AND LIMITATIONS.—The Corporation shall 
be subject to the provisions of this part and, to the extent not 
inconsistent with this part, to the District of Columbia Business 
Corporation Act. The business activities of the Corporation shall 
68 Stat. 177. 
always be limited to the purposes set forth in subsection (a) of this 
section. It shall have the powers conferred upon a corporation by the 
District of Columbia Business Corporation Act as from time to time 
in effect in order to conduct its corporate affairs and to carry out its 
purposes and activities incidental thereto. 
;'-•< r: >; 
"(d) DEFINITION OF EDUCATION FACILITIES PURPOSE.—As used in 
,4« qieLCi 
this section, an 'education facilities purpose' includes any activity 
(including activities related to the payment of financing or trans-
action costs) relating to the construction, reconstruction, renovation, 
acquisition, or purchase of (1) education, training, or research facili-
ties or housing for students, faculty, or staff, (2) any underlying real 
property or any interest therein, (3) furniture, fixtures, and equip-
ment to be used in connection with any education or training 
facility or housing for students, faculty, or staff, and (4) instructional 
equipment and research instrumentation including site preparation 
for such equipment and instrumentation. 
"CRITERIA FOR GUARANTEES AND INSURANCE 
"SEC. 752. (a) GENERAL RULE.—The Corporation shall provide 
20 use ii32f-i. 
direct insurance, guarantees, and reinsurance on obligations issued 
for education facilities purposes only in accordance with the require-
ments of this section. 
"(b) ALLOCATION OF REINSURANCE CAPACITY.— 
"(1) At least the percentages specified in paragraph (2) of the 
aggregate dollar amount of bond and debenture issues reinsured 
by the Corporation shall be issues which, without insurance, are 
listed by a nationally recognized statistical rating organization 
at a rating below the third highest rating of such organization. 
"(2) For the purpose of paragraph (1) of this subsection, 
the percentages specified in this paragraph shall be— 
"(A) 10 percent for the first full year of operation of the 
Corporation; 
"(B) 30 percent for the second full year of such operation; 
and 
"(C) 50 percent for the third full year of such operation 
. ...^j:? r :^u m: 
and thereafter. 
"(3) No bond or debenture issue which is both reinsured and 
directly insured by the Corporation may be counted toward the 
fulfillment of the requirements of paragraph (1). 
"(c) 
DIRECT INSURANCE AND GUARANTEE ACTIVITIES; LIMITA-
TIONS.— 
"(1) All of the assets and obligations directly covered by 
primary insurance or guarantees issued by the Corporation 
shall be assets or obligations of institutions which are, without 
jmt osu m 
100 STAT. 1530 
PUBLIC LAW 99-498—OCT. 17, 1986 
'I .1B*S ^^ 
Securities. 
Real property. 
insurance or guarantee, listed by a nationally recognized statis-
tical rating organization at a rating below the third highest 
rating of such organization. 
"(2) At least the percentages specified in paragraph (3) of the 
aggregate dollar amount of the assets and obligations reinsured, 
insured, and guaranteed by the Corporation under this section 
shall be in the direct insurance and guarantee activities speci-
fied in this subsection. 
"(3) For the purpose of paragraph (2) of this paragraph, the 
percentages specified in this paragraph shall be— 
"(A) 10 percent for the first full year of operation of the 
Corporation; 
"(B) 30 percent for the second full year of such operation; 
and 
"(C) 50 percent for the third full year of such operation 
81 i 
and thereafter. 
"(4) For the purpose of paragraph (1), the assets and obliga-
tions which may be directly covered by primary insurance or 
guarantees issued by the Corporation are— 
"(A) bonds, debentures, notes, evidences of debt, loans, 
and interests therein, the proceeds of which are to be used 
for an education facilities purpose; and 
"(B) leases of personal, real, or mixed property to be used 
for an education facilities purpose. 
"(d) NOTICE OF SERVICES.—The Corporation shall take such steps 
as may be necessary to publicize the availability of its insurance and 
reinsurance programs under this section in a manner that assures 
that information concerning such programs will be available to each 
eligible institution. 
"(e) NONDISCRIMINATION REQUIRED.— 
' 
^ Tr-H*-
"(1) The Corporation may not carry out any activities with 
respect to any educational facilities purpose of a participating 
institution if the institution discriminates on account of race, 
color, religion (subject to paragraph (2)), national origin, sex (to 
the extent provided in title IX of the Education Amendments of 
20 use 1681. 
1972), or handicapping condition. 
"(2) The prohibition with respect to religion shall not apply to 
an educational institution which is controlled by or which is 
closely identified with the tenets of a particular religious 
organization if the application of this section would not be 
consistent with the religious tenets of such organization. 
"(3) Each participating institution shall certify to the Cor-
poration that the institution does not discriminate as required 
by the provisions of paragraph (1). 
oau fti 
PROCESS OF ORGANIZATION 
20 use ii32f-2. 
"SEC. 753. The Secretary of the Treasury, the Secretary, and the 
Student Loan Marketing Association shall each appoint 2 persons to 
be incorporators of the Corporation. If either the Secretary of the 
Treasury or the Secretary fail to appoint incorporators within 90 
days after the date of enactment of the Higher Education Amend-
ments of 1986, the Student Loan Marketing Association, after con-
sultation with the Committee on Labor and Human Resources of the 
Senate and the Committee on Education and Labor of the House of 
Representatives, shall have the authority to name the incorporators 
which have not been so appointed. The incorporators so appointed 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1531 
shall each sign the articles of incorporation and shall serve as the 
initial Board of Directors until the members of the first regular 
Board of Directors shall have been appointed and elected. Such 
incorporators shall take whatever actions are necessary or appro-
priate to establish the Corporation, including the filing of articles of 
incorporation. 
OPERATION AND ELECTION OF BOARD OF DIRECTORS 
"SEC. 754. (a) IN GENERAL.—The Corporation shall have a Board of 20 USC ll32f-3. 
Directors which shall consist of 11 members, of whom one shall be 
elected annually by the Board to serve as chairman. Directors shall 
^ ^ " " 
serve for terms of one year or until their successors have been 
appointed and qualified, and any member so appointed to fill a 
vacancy shall be appointed only for the unexpired term of the 
Director whom he succeeds. Two Directors shall be appointed by the 
Secretary of the Treasury; 2 Directors shall be appointed by the 
Secretary; 3 Directors shall be appointed by the Student Loan 
Marketing Association; and the remaining 4 Directors shall be 
elected by the holders of the Corporation's voting common stock at 
least one of whom shall be a college or university administrator. The 
failure of the Secretary or the Secretary of the Treasury to make 
any one or more appointments to the Board of Directors of the 
" li..'ri oan c
)
; 
Corporation shall not affect or diminish the right and power of (1) 
the other directors who have been appointed or elected to assume 
and carry out their duties as directors and (2) the Board so con-
stituted to act for all purposes as the full Board of the Corporation. 
"(b) CUMULATIVE VOTING.—The articles of incorporation of the 
Corporation shall provide for cumulative voting under section 27(d) 
of the District of Columbia Business Corporation Act (D.C. Code, sec. 
29-327(d)). 
INITIAL CAPITAL 
"SEC. 755. (a) AUTHORITY TO ISSUE COMMON STOCK.—The Corpora- 
20 USC li32f-4. 
tion shall issue shares of voting common stock of no par value at 
such time within 6 months of its incorporation as shall be des-
ignated by the initial Board of Directors, and from time to time 
thereafter. 
"(h) SUBSCRIPTION BY SECRETARY.—The Secretary is authorized 
and directed to subscribe to and purchase, in each of the 5 years 
following the incorporation of the Corporation, voting common stock 
of the Corporation having an aggregate purchase price of not more 
than $20,000,000, subject to availability of appropriations. 
"(c) SUBSCRIPTION BY ASSOCIATION.—The Student Loan Marketing 
Association is authorized to subscribe to and purchase during the 5 
years following the incorporation of the Corporation voting common 
stock of the Corporation having an aggregate purchase price of 
$25,000,000 or more. 
"(d) ANNUAL ISSUANCE.—The Corporation is authorized to offer 
for subscription and purcheise to the general public during the 5 
years following the incorporation of the Corporation, voting common 
stock having an aggregate purchase price of $125,000,000. Not less 
than 40 percent of such stock shall be set aside for purchase by 
institutions of higher education prior to being offered to the general 
public. 
100 STAT. 1532 
PUBLIC LAW 99-498—OCT. 17, 1986 
'"^ft? 
ISSUE OF NONVOTING STOCK AND DEBT TO THE PUBLIC 
j 
'ttdB 
20 use 1132f-5. 
"SEC. 756. The Corporation may issue, without limitation as to 
amount or restriction as to ownership, such nonvoting common, 
preferred, and preference stock, debt, and such other securities and 
obligations, in such amounts, at such times, and having such terms 
and conditions as may be deemed necessary or appropriate by its 
Board of Directors. 
20 use 1132f-6. 
20 u s e 1132f-7. 
.i'-iSI, 
OBLIGATIONS NOT FEDERALLY GUARANTEED; NO FEDERAL PRIORITY 
"SEC. 757. No obligation which is insured, guaranteed, or other-
wise backed by the Corporation, shall be deemed to be an obligation 
which is guaranteed by the full faith and credit of the United States. 
No obligation which is insured, guaranteed, or otherwise backed by 
the Corporation shall be deemed to be an obligation which is 
guaranteed by the Student Loan Marketing Association. This sec-
tion shall not affect the determination of whether such obligation is 
guaranteed for purposes of Federal income taxes. 
"AUTHORITY OF SECRETARY TO SELL COMMON STOCK; RIGHT OF FIRST 
REFUSAL 
"SEC. 
758. (a) AUTHORITY To SELL.—The Secretary may, 
at 
any 
time after a date which is 5 years after the date of incorporation of 
the Corporation, sell (in one or more transactions) the voting 
common stock of the Corporation owned by the Secretary. Prior to 
offering such common stock for sale to any other person, the Sec-
retary shall offer such stock to the Student Loan Marketing Associa-
tion at the price determined pursuant to subsection (b). Not later 
than 30 days prior to the sale of such stock, the Secretary shall 
advise, in writing, the Committee on Labor and Human Resources of 
the Senate and the Committee on Education and Labor of the House 
of Representatives of plans of the Secretary. 
"(b) PURCHASE PRICE.—The price at which the Secretary may sell 
the voting common stock of the Corporation under subsection (a) 
shall be the market value of such shares as determined by the 
Secretary, on the basis of an independent appraisal, but shall not be 
less than the value of such shares as shown on the books of account 
of the Corporation as of the date of closing of such purchase. In no 
event shall the purchase price be less than the original issuance 
price. 
"(c) BOARD OF DIRECTORS ELECTED AFTER MAJORITY BUY-OUT.—If 
the Student Loan Marketing Association acquires from the Sec-
retary sufficient voting common stock so as to own more than 50 
percent of the issued and outstanding voting common stock of the 
Corporation, section 754 (except subsection (b)) shall be of no further 
force or effect and the Board of Directors of the Corporation shall 
thereafter be elected entirely by the voting common shareholders. 
"(d) RIGHT OF FIRST REFUSAL TO ASSOCIATION.—Until such time as 
the Student Loan Marketing Association acquires all of the voting 
common stock owned by the Secretary, the Student Loan Marketing 
Association shall have the right to purchase all, or any lesser 
portion it shall select, of each of the issues of equity securities or 
other securities convertible into equity of the Corporation as the 
Corporation may issue from time to time, on the same terms and 
conditions as such securities are to be offered to other persons. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1533 
"(e) AUTHORITY OF ASSOCIATION WITH RESPECT TO CORPORATION.— 
The Student Loan Marketing Association is authorized and empow-
ered to purchase stock and to carry out such other activities as are 
necessary and appropriate for carrying out the Association's obliga-
tions and responsibilities with respect to the Corporation. The Stu-
dent Loan Marketing Association is also authorized to enter into 
such other transactions with the Corporation, including the acquisi-
tion of securities and obligations of the Corporation referred to in 
this section and sections 755 and 756, and arrangements for the 
provision of management and other services to the Corporation, as 
shall be approved by the Student Loan Marketing Association and 
the Corporation. 
"USE OF STOCK SALE PROCEEDS 
"SEC. 759. The proceeds received by the Secretary upon the sale of 
any shares of the Corporation to the Student Loan Marketing 
Association or any other person shall be deposited in the general 
fund of the Treasury. 
"AUDITS; REPORTS TO THE PRESIDENT AND THE CONGRESS 
"SEC. 760. (a) ACCOUNTING.—The books of account of the Corpora-
tion shall be maintained in accordance with generally accepted 
accounting principles and shall be subject to an annual audit by an 
independent public accountant. 
"(b) REPORTS.—The Corporation shall transmit to the President 
and the Congress, annually and at such other times as it deems 
desirable, a report of its operations and activities under this part, 
which annual report shall include a copy of the Corporation's 
financial statements and the opinion with respect thereto prepared 
by the independent public accountant reviewing such statements 
and a copy of any report made on an audit conducted under subsec-
tion (a). "The annual reports shall include such information and 
other evidence as is necessary to demonstrate that the Corporation 
has complied with the requirements of section 752. 
"PART F—HOUSING AND OTHER EDUCATIONAL FACIUTIES LOANS 
20 u s e 1132f-8. 
20 u s e 1132f-9. 
FEDERAL ASSISTANCE IN THE FORM OF LOANS 
"SEC. 761. (a) AUTHORITY AND CONDITIONS FOR LOANS.—To assist 
undergraduate 
postsecondary 
educational 
institutions 
in 
the 
construction, reconstruction, or renovation of housing, undergradu-
ate academic facilities, and other educational facilities for students 
and faculties, the Secretary may make loans of funds to such 
institutions for the construction, reconstruction, or renovation of 
such facilities. No such assistance shall be provided unless— 
"(1) the educational institution involved is unable to secure 
the necessary funds for the construction or purchase from other 
sources upon terms and conditions equally as favorable as the 
terms and conditions applicable to loans under this title; and 
"(2) the Secretary finds that any such construction will be 
undertaken in an economical manner, and that any such facili-
ties are not or will not be of elaborate or extravagant design or 
materials. 
"(b) 
USE OF LOANS FOR PREVIOUSLY MADE CONTRACTS.—Any 
undergraduate postsecondary educational institution which, prior to 
20 u s e 1132g. 
100 STAT. 1534 
PUBLIC LAW 99-498—OCT. 17, 1986 
.H-1gfcft OBt! 0 
Post, p. 1545. 
Contracts. 
Securities. 
31 u s e 3101 et 
seq. 
the date of enactment of this section, has contracted for housing or 
other educational facilities may, in connection therewith, receive 
loans authorized under this title, as the Secretary may determine. 
No such loan shall be made for any housing or other educational 
facilities, the construction of which was begun prior to the effective 
date of this section, or completed prior to the filing of an application 
under this title. 
"(c) AMOUNT AND CONDITIONS OF LOANS.—A loan to an under-
graduate postsecondary educational institution— 
"(1) may be in an amount not exceeding the total development 
cost of the facility, as determined by the Secretary; 
"(2) shall be secured in such manner and be repaid within 
such period, not exceeding 50 years, as may be determined by 
the Secretary; and 
"(3) shall bear interest at a rate determined by the Secretary 
which shall be not more than the lower of (A) 5.5 percent per 
annum, or (B) the total of one-quarter of 1 percent per annum 
added to the rate of interest paid by the Secretary on funds 
obtained from the Secretary of the Treasury as provided in 
subsection (d). 
"(d) USE OF FUNDS FROM TITLE IV OF THE HOUSING ACT OF 1950.— 
Funds obtained pursuant to section 401(d) of the Housing Act of 1950 
shall be available for the purposes of carrying out this part. For such 
purposes, the total amount of notes and obligations which the 
Secretary may continue to issue and have outstanding for purchase 
by the Secretary of the Treasury shall not exceed the amount issued 
and outstanding under such section 401(d) as of September 30, 1985. 
Such notes and other obligations shall be in such forms and denomi-
nations, have such maturities, and be subject to such terms and 
conditions as may be prescribed by the Secretary, with the approval 
of the Secretary of the Treasury. Such notes or other obligations 
issued to obtain funds for loan contracts entered into after the 
effective date of the Higher Education Act Amendments of 1986 
shall bear interest at a rate determined by the Secretary of the 
Treasury which shall not be more than the average current yield on 
outstanding obligations of the United States of comparable matu-
rities in the month preceding the month in which the contract for 
such loan is made. The Secretary of the Treasury is authorized and 
directed to purchase any notes and other obligations of the Sec-
retary issued under this part and for such purpose is authorized to 
use as a public debt transaction the proceeds from the sale of any 
securities issued under chapter 31 of title 31, United States Code, 
and the purposes for which securities may be issued under such 
chapter are extended to include any purchases of such notes and 
other obligations. The Secretary of the Treasury may at any time 
sell any of the notes or other obligations acquired under this part. 
All redemptions, purchases, and sales by the Secretary of the Treas-
ury of such notes or other obligations shall be treated as public debt 
transactions of the United States. 
"(e) USE OF FUNDS.—Not less than 10 percent of the funds held by 
the Secretary under subsection (d) shall be made available for loans 
under this part for each fiscal year. 
"(D APPROPRIATION TO COVER NOTES AND OBUGATIONS NOT COV-
ERED B
Y LOAN REPAYMENT.—There are authorized to be appro-
priated to the Secretary such sums as may be necessary, together 
with principal and interest payments made by postsecondary edu-
cational institutions gissisted with loans made under this part (or 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1535 
under title IV of the Housing Act of 1950), for payment on notes and 
obligations issued by the Secretary under this part or such title. 
Post, p. 1545. 
GENERAL PROVISIONS 
"SEC. 762. (a) BUDGET AND ACCOUNTING.—In the performance of, 
20 use ii32g-i. 
and with respect to, the functions, powers, and duties under this 
part, the Secretary notwithstanding the provisions of any other law, 
shall— 
^
> ^ 0-:i'j it 
"(1) prepare annually and submit a budget program as pro-
vided for wholly owned Government corporations by chapter 91 
of title 31, United States Code; and 
3i use 9101 et 
"(2) maintain a set of accounts which shall be audited by the ««9-
Comptroller General in accordance with the provisions of chap-
ter 35 of title 31, United States Code, but such financial trans- 3i use 3501 et 
actions of the Secretary, as the making of loans and vouchers s«9-
approved by the Secretary, in connection with such financial 
transactions shall be final and conclusive upon all officers of the 
Government. 
"(b) USE OF FUNDS.—Funds made available to the Secretary pursu-
ant to the provisions of this part shall be deposited in a checking 
account or accounts with the Treasurer of the United States. Re-
ceipts and assets obtained or held by the Secretary in connection 
with the performance of functions under this part, and all funds 
available for carrying out the functions of the Secretary under this 
part (including appropriations therefore, which are hereby au-
thorized), shall be available, in such amounts as may from year to 
year be authorized by the Congress, for the administrative expenses 
of the Secretary in connection with the performance of such func-
tions. 
"(c) LEGAL POWERS.—In the performance of, and with respect to, 
the functions, powers, and duties under this part, the Secretary, 
notwithstanding the provisions of any other law, may— 
"(1) prescribe such rules and regulations as may be necessary 
to carry out the purposes for this part; 
"(2) sue and be sued; 
"(3) foreclose on any property or commence any action to 
protect or enforce any right conferred upon him by any law, 
contract, or other agreement, and bid for and purchase at any 
foreclosure or any other sale any property in connection with 
which the Secretary has made a loan pursuant to this part; 
"(4) in the event of any such acquisition, notwithstanding any 
Real property, 
other provision of law relating to the acquisition, handling, or 
disposal of real property by the United States, complete, admin-
ister, remodel and convert, dispose of, lease, and otherwise deal 
with, such property, but any such acquisition of real property 
shall not deprive any State or political subdivision thereof of its 
,,,^-..., 
civil or criminal jurisdiction in and over such property or 
- '' < ^ j^^ 
impair the civil rights under the State or local laws of the 
inhabitants on such property; 
"(5) sell or exchange at public or private sale, or lease, real or 
personal property, and sell or exchange any securities or obliga-
tions, upon such terms as the Secretary may fix; 
"(6) obtain insurance against loss in connection with property 
insurance. 
and other assets held; 
"(7) subject to the specific limitations in this part, consent to eontracts. 
the modification, with respect to the rate of interest, time of 
100 STAT. 1536 
PUBLIC LAW 99-498—OCT. 17, 1986 
.f--<: 
i)& 
26 u s e 1 et seq. 
Contracts.^' 
31 u s e 9101 et 
seq. 
12 u s e 1701k 
note. 
40 u s e 276a 
note. 
.itosiiiK 
>
, I 
payment of any installment of principal or interest, security, or 
.'pj any other term of any contract or agreement to which the 
Secretary is a party or which has been transferred to the 
Secretary pursuant to this part, granting to a borrower of a loan 
made before October 1, 1986, the option of repaying the loan at 
a discount computed in accordance with subsection (d) if the 
repayment is (A) made from non-Federal sources, (B) not de-
rived from proceeds of obligations the income of which is 
exempt from taxation under the Internal Revenue Code of 1954, 
and (C) made on a loan that has been outstanding for at least 5 
years; and 
"(8) include in any contract or instrument made pursuant to 
*
H
-
i
^ this title such other covenants, conditions, or provisions as may 
be necessary to assure that the purposes of this part will be 
achieved. 
"(d) 
COMPUTATION OF ALLOWABLE DISCOUNTS.—The Secretary 
shall compute the discount which may be offered to a borrower as an 
inducement to early repayment under subsection (c)(7) in an amount 
determined by the Secretary to be in the best financial interests of 
the Government, taking into account the yield on outstanding 
marketable obligations of the United States having maturities com-
parable to the remaining term of such loan. 
"(e) NONDISCRIMINATION BETWEEN BORROWERS IN OFFERING DIS-
COUNTED PREPAYMENT.—(1) If the Secretary offers a discount as an 
inducement to early repayment under subsection (cX7), such offer 
shall be available without regard to whether the borrower is delin-
quent or in default on the loan on or before October 1, 1986, but the 
Secretary shall refuse to make such offer to a borrower that be-
comes delinquent or goes into default after that date. 
"(2) The discount offered shall apply, in the case of a borrower 
that complies with paragraph (1), to the entire amount outstanding 
on the loan (including any amount owed with respect to payments 
that are overdue). 
"(f) CONTRACTS FOR SUPPUES OR SERVICES.—Section 3709 of the 
Revised Statutes shall not apply to any contract for services or 
supplies on account of any property acquired pursuant to this part if 
the amount of such contract does not exceed $1,000. 
"(g) APPUCABIUTY OF GOVERNMENT CORPORATION CONTROL ACT.— 
The provisions of section 9107(a) of title 31, United States Code, 
which are applicable to corporations or agencies subject to chapter 
91 of such title, shall also be applicable to the activities of the 
Secretary under this part. 
"(h) WAGE RATES.—The Secretary shall take such action as may 
be necessary to ensure that all laborers and mechanics employed by 
contractors or subcontractors or any project assisted under this part, 
the construction or rehabilitation of which was commenced after the 
date of enactment of the Housing Act of 1950— 
"(1) shall be paid wages at rates not less than those prevailing 
^ 
on the same type of work on similar construction in the imme-
diate locality as determined by the Secretary of Labor in accord-
ance with the Act of March 3, 1931 (Davis-Bacon Act), as 
amended; and 
"(2) shall be employed not more than 40 hours in any one 
week unless the employee receives wages for his emplojmtient in 
excess of the hours specified above at a rate not less than one 
5 
and one-half times the regular rate at which he is employed; 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1537 
but the Secretary may waive the application of this subsection in 
cases or classes of cases where laborers or mechanics, not otherwise 
employed at any time in the construction of such project, voluntarily 
donate their services without full compensation for the purpose of 
lowering the costs of construction and the Secretary determines that 
any amounts saved thereby are fully credited to the educational 
institution undertaking the construction. 
"(i) LIMITATION.—No loan may be made under this part for any 
facility on the campus of any undergraduate postsecondary edu-
cational institution until 10 years after the date on which a previous 
loan for another facility on such campus was made under this part. 
"APPORTIONMENT; PRIORITIES 
"SEC. 763. (a) APPORTIONMENT.—Not more than 12.5 percent of the 
20 use ii32g-2. 
amount of the funds provided for in this part in the form of loans 
shall be made available to educational institutions within any one 
S t a t e . 
.-•>,'! eiYj 
"(b) PRIORITIES.—In awarding loans under this part, the Secretary 
shall give priority— 
"(1) to loans for renovation or reconstruction of undergradu-
ate academic facilities; and 
.,. 
"(2) to loans for renovation or reconstruction of older under-
graduate academic facilities and undergraduate academic facili-
ties that have gone without major renovation or reconstruction 
for an extended period. 
"DEFINITIONS 
"SEC. 764. For the purpose of this part: 
20 use ii32g-3. 
"(a) HOUSING.—The term 'housing' means— 
"(1) new or existing structures suitable for dwelling use, 
including single-room dormitories and apartments; and 
"(2) dwelling facilities provided for rehabilitation, alteration, 
conversion, or improvement of existing structures which are 
otherwise inadequate for the proposed dwelling use. 
>, 
"(b) EDUCATIONAL INSTITUTION.—The term 'undergraduate post- 
-y 
secondary educational institution' means— 
"(1)(A) any educational institution which offers, or provides 
)i f 
satisfactory assurance to the Secretary that it will offer within a 
reasonable time after completion of a facility for which assist-
ance is requested under this part, at least a 2-year program 
-;.^, acceptable for full credit toward a baccalaureate degree (includ-
ing any public educational institution, or any private edu-
cational institution no part of the net earnings of which inures 
to the benefit of any private shareholder or individual); or 
"(B) any public educational institution which— 
"(i) is administered by a college or university which is 
accredited by a nationally recognized accrediting agency or 
association; 
"(ii) offers technical or vocational instruction; and 
"(iii) provides residential facilities for some or all of the 
- u
i
>
H 
students receiving such instruction; 
: >p'«sq 
"(2) any hospital operating a school of nursing beyond the 
level of high school approved by the appropriate State author-
ity, or any hospital approved for internships, by recognized 
authority, if such hospital is either a public hospital or a private 
100 STAT. 1538 
PUBLIC LAW 99-498—OCT. 17, 1986 
- 1 ^ ' ' ' 
Grants. 
0J m 
f 
hospital, no part of the net earnings of which inures to the 
»' 
benefit of any private shareholder or individual; 
V 
"(3) any corporation (no part of the net earnings of which 
k 
inures to the benefit of any private shareholder or individual)— 
J: 
"(A) established for the sole purpose of providing housing 
li>i 
or other educational facilities for students or students and 
faculty of one or more institutions included in paragraph (1) 
V
* 
without regard to their membership in or affiliation with 
1 
any social, fraternal, or honorary society or organization; 
and 
"(B) upon dissolution of which all title to any property 
purchased or built from the proceeds of any loan which is 
made under section 761, will pass to such institution (or to 
anyone or more of such institutions) unless it is shown to 
:?t' ic 
the satisfaction of the Secretary that such property or the 
"
J 
proceeds from its sale will be used for some other nonprofit 
s 
educational purpose; 
"(4) any agency, public authority, or other instrumentality of 
V 
any State, established for the purpose of providing or financing 
housing or other educational facilities for students or faculty of 
' 
any educational institution included in paragraph (1), but noth-
ing in this paragraph shall require an institution included in 
paragraph (1) to obtain loans or grants through any instrumen-
-i 
tality included in this paragraph; and 
f- 
"(5) any nonprofit student housing cooperative corporation 
established for the purpose of providing housing for students or 
students and faculty of any institution included in paragraph 
(1). 
In the case of any loan made under section 761 to a corporation 
«-gS fi 08"' rti described in paragraph (3) which was not established by the institu-
tion or institutions for whose students or students and faculty it 
would provide housing, or to a student housing cooperative corpora-
tion described in paragraph (5), and in the case of any loan which is 
obtained from other sources by such a corporation, the Secretary 
shall require that the note securing such loan be cosigned by such 
State and local 
institution (or by any one or more of such institutions). Where the 
governments. 
law of any State in effect on the date of enactment of the Housing 
12 use 1703 
Act of 1964 prevents the institution or institutions, for whose stu-
note. 
dents or students and faculty housing is to be provided, from 
cosigning the note, the Secretary shall require the corporation and 
the proposed project to be approved by such institution (or by any 
one or more of such institutions) in lieu of such cosigning. 
"(c) UNDERGRADUATE ACADEMIC FACIUTIES.—(1) Except as pro-
vided in paragraph (2), the term 'undergraduate academic facilities' 
means structures suitable for use as classrooms, laboratories, librar-
ies, and related facilities, the primary purpose of which is the 
instruction of students pursuing a baccalaureate degree, or for 
administration of the educational programs serving such students, 
of an institution of higher education, and maintenance, storage, or 
utility facilities essential to operation of the foregoing facilities, as 
well as infirmaries or other facilities designed to provide primarily 
Handicapped 
for outpatient care of student and instructional personnel. Plans for 
persons. 
such facilities shall be in compliance with such standards as the 
Secretary may prescribe or approve in order to insure that projects 
assisted with the use of Federal funds under this title shall be, to the 
extent appropriate in view of the uses to be made of the facilities, 
accessible to and usable by handicapped persons. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1539 
"(2) The term 'undergraduate academic facilities' shall not include 
(A) any facility intended primarily for events for which admission is 
to be charged to the general public, (B) any gymnasium or other 
facility specially designed for athletic or recreational activities, 
other than for an academic course in physical education or where 
the Secretary finds that the physical integration of such facilities 
with other undergraduate academic facilities included under this 
part is required to carry out the objectives of this part, (C) any 
facility used or to be used for sectarian instruction or as a place for 
religious worship, or (D) any facility which (although not a facility 
described in the preceding clause) is used or to be used primarily in 
connection with any part of the program of a school or department 
of divinity. 
"(d) DEVELOPMENT COST.—The term 'development cost' means 
costs of the construction of the housing or other educational facili-
ties and the land on which it is located, including necessary site 
improvements to permit its use for housing or other educational 
facilities; except that in the case of the purchase of facilities such 
term means the cost as approved by the Secretary. 
"(e) FACULTIES.—The term 'faculties' means member of the faculty 
and their families. 
"(f) OTHER EDUCATIONAL FACILITIES.—The term 'other educational 
facilities' means (1) new or existing structures suitable for use as 
cafeterias or dining halls, student centers or student unions, 
infirmaries or other inpatient or outpatient health facilities, or for 
other essential service facilities, and (2) structures suitable for the 
above uses provided by rehabilitation, alteration, conversion, or 
improvement of existing structures which are otherwise inadequate 
for such uses. 
"PART G—SPECIAL PROGRAMS 
WELCH HALL 
"SEC. 771. (a) PROGRAM AUTHORITY.—In recognition of the unique 
architectural and historic significance to the education profession of 
Welch Hall, the Secretary is authorized, in accordance with the 
provisions of this section, to provide financial assistance to Eastern 
Michigan University in Ypsilanti, Michigan, for the purpose of the 
renovation and restoration of the physical facilities of Welch Hall. 
"(b) APPLICATION.—No financial assistance may be made available 
under this section except upon an application at such time, in such 
manner, and containing or accompanied by such information, as the 
Secretary may reasonably require. 
"(c) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 
be appropriated $2,000,000 to carry out the provisions of this section. 
Funds appropriated pursuant to this section shall remain available 
until expended. 
Michigan. 
20 u s e 1132h. 
•*rt.y 
ACADEMIC HEALTH EDUCATION CENTER AUTHORIZED 
"SEC. 
772. (a) ASSISTANCE AUTHORIZED.—The Secretary is au-
thorized, in accordance with the provisions of this section, to provide 
financial assistance to the Rochester Institute of Technology located 
in Rochester, New York, to pay the Federal share of the cost of 
construction, and related costs (including equipment), for the Aca-
demic Health Education Center facility at the Rochester Institute of 
New York. 
20 use 1132h-l. 
100 STAT. 1540 
PUBLIC LAW 99-498—OCT. 17, 1986 
Technology, to be used as a national model for the integration of 
student academic, counseling, health, and professional development 
activities. The Center will integrate students and programs devel-
oped for the hearing-impaired. 
"(b) TERMS AND CONDITIONS.—(1) No financial eissistance may be 
made available under this section except upon application at such 
time, in such manner, and containing or accompanied by such 
information as the Secretary may reasonably require. 
"(2) For the purpose of this section, the Federal share of the cost of 
the Academic Health Education Center facility at the Rochester 
Institute of Technology shall not exceed 50 percent. 
"(c) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 
be appropriated such sums, not to exceed $1,800,000 to carry out the 
provisions of this section. Funds appropriated pursuant to this 
section shall remain available until expended. 
North Carolina. 
20 u s e 1132h-2. 
ESTEY HALL 
"SEC. 773. (a) PROGRAM AUTHORITY —In recognition of its historic 
and architectural significance as the first Black women's college 
dormitory, the Secretary is authorized, in accordance with the 
provisions of this section, to provide financial assistance to Shaw 
University of Raleigh, North Carolina, for the purpose of the ren-
ovation and restoration of the physical facilities of Estey Hall. 
"(b) APPLICATION—No financial assistance may be made under 
this section except upon an application at such time, in such 
manner, and containing or accompanied by such information, as the 
Secretary may reasonably require. 
"(c) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 
be appropriated $550,000 to carry out the provisions of this section. 
Funds appropriated pursuant to this section shall remain available 
until expended. 
, ^ , ,, ,,, 
.«:i* '<ff. 
20 u s e 1132h-3. 
ELECTRONIC INSTRUCTIONAL NETWORK FOR GIFTED AND TALENTED 
STUDENTS 
"SEC. 
774. (a) ASSISTANCE AUTHORIZED.—In recognition of the 
benefits to be gained from applying existing and emerging tech-
nologies to classroom instruction, the Secretary is authorized, under 
the provisions of this section, to provide financial assistance to a 4-
year postsecondary institution in cooperation with school districts, 
for the purpose of renovating, constructing, and equipping a facility 
incorporating such technological advances as two-way interactive 
video communications to extend an existing electronic instructional 
network for providing college and advanced level courses to talented 
and gifted secondary school students. 
"Ot)) APPLICATION.—No financial assistance may be made available 
under this section except upon an application at such time, in such 
manner, and containing or accompanied by such information, as the 
Secretary may reasonably require. 
"(c) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 
be appropriated $2,000,000 to carry out the provisions of this section. 
Funds appropriated pursuant to this section shall remain available 
until expended. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1541 
MARY MCLEOD BETHUNE MEMORIAL FINE ARTS CENTER 
"SEC. 775. (a) GENERAL AUTHORITY.—In recognition of the remark-
able career of Mary McLeod Bethune, founder and president of 
Bethune-Cookman College, founder and first president of the Na-
tional Council of Negro Women, and confidant and advisor to Presi-
dents of the United States, and in order to enhance the ability of 
Bethune-Cookman College to carry on the unique quality of service 
to the community and to the Nation that characterizes the life of 
Mary McLeod Bethune, the Secretary shall, in accordance with the 
provisions of this section, provide financial assistance to the 
Bethune-Cookman College in Volusia County, Florida, to enable the 
Bethune-Cookman College to establish the Mary McLeod Bethune 
Memorial Fine Arts Center. 
"(b) APPLICATION.—No financial assistance may be made under 
this section except upon an application at such time, in f ^ h 
manner, and containing or accompanied by such information as the 
Secretary may reasonably require. 
"(c) USES.—The financial assistance made available pursuant to 
this section shall be used for the construction of the Mary McLeod 
Bethune Memorial Fine Arts Center building, the acquisition of 
necessary equipment, and the acquisition of necessary real property 
for the establishment of the Center. 
"(d) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 
be appropriated such sums, not to exceed $6,200,000, as may be 
necessary to carry out the provisions of this section. Funds appro-
priated pursuant to this section shall remain available until 
expended. 
Florida. 
20 u s e 1132h-4. 
UNIVERSITY OF CONNECTICUT BEHAVIORAL SCIENCE FACILITY 
"SEC. 776. (a) GENERAL AUTHORITY.—The Secretary is authorized 
to provide financial assistance, in accordance with the provisions of 
this section, to pay the costs of the Behavioral Science Facility at the 
University of Connecticut, located at Storrs, Connecticut, to enable 
the University of Connecticut to expand collaborative research for 
the benefit of the region. 
"(b) APPUCATION.—No financial assistance may be made under 
this section except upon an application at such time, in such 
manner, and containing or accompanied by such information, as the 
Secretary may reasonably require. 
"(c) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 
be appropriated such sums, not to exceed $1,300,000, as may be 
necessary to carry out the provisions of this section. Funds appro-
priated pursuant to this section shall remain available until 
expended. 
20 u s e 1132h-5. 
UNIVERSITY OF RHODE ISLAND BUSINESS ADMINISTRATION PROGRAM 
"SEC. 777. (a) GENERAL AUTHORITY.—The Secretary is authorized 
20 use ii32h-6. 
to provide financial assistance, in accordance with the provisions of 
this section, to pay the costs establishing a business administration 
program leading to a doctorate degree at the University of Rhode 
Island located at Kingston, Rhode Island, in order to enhance 
economic development of the southeastern New England region. 
"(b) APPUCATION.—No financial assistance may be made under 
this section except upon an application at such time, in such 
100 STAT. 1542 
PUBLIC LAW 99-498—OCT. 17, 1986 
manner, and containing or accompanied by such information, as the 
Secretary may reasonably require. 
"(c) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 
be appropriated such sums, not to exceed $300,000, as may be 
necessary to carry out the provisions of this section. Funds appro-
priated pursuant to this section shall remain available until ex-
pended. 
"PART H—GENERAL 
", 
* 
:i'~im 
' . --4 -. 
,• 
-I 
RECOVERY OF PAYMENTS 
20 use 11321. 
"SEC. 781. (a) PUBUC BENEFIT.—The Congress declares that, if a 
facility constructed with the aid of a grant under part A or B of this 
title is used as an academic facility for 20 years following completion 
of such construction, the public benefit accruing to the United 
States will equal in value the amount of the grant. The period of 20 
years after completion of such construction shall therefore be 
deemed to be the period of Federal interest in such facility for the 
purposes of this title. 
Grants. 
"(b) RECOVERY UPON CESSATION OF PUBLIC BENEFIT.—If, within 20 
years after completion of construction of an academic facility which 
has been constructed, in part with a grant under part A or B of this 
title— 
"(1) the applicant (or its successor in title or possession) ceases 
or fails to be a public or nonprofit institution, or 
"(2) the facility ceases to be used as an academic facility, or 
the facility is used as a facility excluded from the term 'aca-
demic facility', unless the Secretary determines that there is 
good cause for releasing the institution from its obligation, 
the United States shall be entitled to recover from such applicant 
? • - • »' ' 
(or successor) an amount which bears to the value of the facility at 
that time (or so much thereof as constituted an approved project or 
projects) the same ratio as the amount of Federal grant bore to the 
cost of the facility financed with the aid of such grant. The value 
shall be determined by agreement of the parties or by action 
brought in the United States district court for the district in which 
such facility is situated. 
"(c) PROHIBITION ON USE FOR RELIGION.—Notwithstanding the 
provisions of subsections (a) and (b), no project assisted with funds 
under this title shall ever be used for religious worship or a sectar-
ian activity or for a school or department of divinity. 
"DEFINITIONS 
20 use I132i-l. 
"SEC 782. The following definitions apply to terms used in this 
title: 
"(IXA) Except as provided in subparagraph (B), the term 
'academic facilities' means structures suitable for use as class-
. ^ ;' 
>
^ .!l 
rooms, laboratories, libraries, and related facilities necessary or 
appropriate for instruction of students, or for research, or for 
administration of the educational or research programs, of an 
institution of higher education, and maintenance, storage, or 
utility facilities essential to operation of the foregoing facilities. 
For the purpose of part A or C, such term includes infirmaries 
or other facilities designed to provide primarily for outpatient 
care of student and instructional personnel. Plans for such 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1543 
facilities shall be in compliance with such standards as the 
Secretary may prescribe or approve in order to ensure that 
projects assisted with the use of Federal funds under this title 
shall be, to the extent appropriate in view of the uses to be 
made of the facilities, accessible to and usable by handicapped 
persons. 
"(B) The term 'academic facilities' shall not include (i) any 
facility intended primarily for events for which admission is to 
be charged to the general public, or (ii) any gymnasium or other 
facility specially designed for athletic or recreational activities, 
other than for an academic course in physical education or 
where the Secretary finds that the physical integration of such 
facilities with other academic facilities included under this title 
is required to carry out the objectives of this title, or (iii) any 
facility used or to be used for sectarian instruction or as a place 
for religious worship, or (iv) any facility which (although not a 
facility described in the preceding clause) is used or to be used 
primarily in connection with any part of the program of a 
school or department of divinity, or (v) any facility used or to be 
used by a school of medicine, school of dentistry, school of 
osteopathy, school of pharmacy, school of optometry, school of 
podiatry, or school of public health as these terms are defined in 
section 724 of the Public Health Service Act, or a school of 
42 use 293d. 
nursing as defined in section 843 of that Act, except that the 
term 'academic facilities' may include any facility described in 
clause (v) to the degree that such facility is owned, operated, 
and maintained by the institution of higher education request-
ing the approval of a project; and that funds available for such 
facility under such project shall be used solely for the purpose of 
conversion or modernization of energy utilization techniques to 
economize on the use of energy resources; and that such project 
is not limited to facilities described in clause (v). 
"(2)(A) The term 'construction' means (i) erection of new or 
expansion of existing structures, and the acquisition and 
installation of initial equipment therefor; or (ii) acquisition of 
existing structures not owned by the institution involved; or (iii) 
a combination of either of the foregoing. For the purpose of the 
preceding sentence, the term 'equipment' includes, in addition 
to machinery, utilities, and built-in equipment and any nec-
essary enclosures or structures to house them, all other items 
necessary for the functioning of a particular facility as an 
academic facility, including necessary furniture, but not includ-
ing books, curricular, and program materials, and items of 
current and operating expense such as fuel, supplies, and the 
like; the term 'initial equipment' means equipment acquired 
and installed in connection with construction; and the terms 
'equipment', 'initial equipment', and 'built-in equipment', shall 
be more particularly defined by the Secretary by regulation. 
"(B) The term 'reconstruction or renovation' means re-
habilitation, alteration, conversion, or improvement (including 
the acquisition and installation of initial equipment, or mod-
ernization or replacement of such equipment) of existing struc-
tures. For the purpose of the preceding sentence, the term 
'equipment' includes, in addition to machinery, utilities, and 
built-in equipment and any necessary enclosures or structures 
to house them, all other items necessary for the functioning of a 
particular facility as an academic facility, including necessary 
100 STAT. 1544 
PUBLIC LAW 99-498—OCT. 17, 1986 
furniture, but not including books, curricular, and program 
materials, and items of current and operating expense such as 
fuel, supplies, and the like; the term 'initial equipment' means 
equipment acquired and installed either in connection with 
construction as defined in paragraph (2)(A), or as part of the 
rehabilitation, alteration, conversion, or improvement of an 
existing structure, which structure would otherwise not be 
adequate for use as an academic facility; the terms 'equipment', 
'initial equipment', and 'built-in equipment' shall be more 
particularly defined by the Secretary by regulation; and the 
term 'rehabilitation, alteration, conversion, or improvement' 
includes such action as may be necessary to provide for the 
architectural needs of, or to remove architectural barriers to, 
handicapped persons with a view toward increasing the acces-
sibility to, and use of, academic facilities by such persons. 
"(3)(A) 'The term 'development cost', with respect to an aca-
demic facility, means the amount found by the Secretary to be 
the cost, to the applicant for a grant or loan under this title, of 
the construction, reconstruction, or renovation involved and the 
cost of necessary acquisition of the land on which the facility is 
located and of necessary site improvements to permit its use for 
such facility. There shall be excluded from the development 
.b8^'^ oiv M
^
^ 
cost— 
"(i) in determining the amount of any grant under part A 
or B, an amount equal to the sum of (I) any Federal grant 
which the institution has obtained or is assured of obtain-
ing, under any law other than this title, with respect to the 
construction, reconstruction, or renovation that is to be 
financed with the aid of a grant under part A or B, and (II) 
the amount of any non-Federal funds required to be ex-
1391 
pended as a condition of such other Federal grant; and 
"(ii) in determining the amount of any loan under part C, 
to 
an amount equal to the amount of any Federal financial 
assistance which the institution has obtained, or is assured 
of obtaining, under any law other than this title, with 
respect to the construction, reconstruction, or renovation 
that is to be financed with the aid of a loan under part C. 
"(B) In determining the development cost with respect to an 
academic facility, the Secretary may include expenditures for 
works of art for the facility not to exceed 1 percent of the total 
cost (including such expenditures) to the applicant of construc-
tion, reconstruction, or renovation of, and land acquisition and 
site improvements for, such facility. 
"(4) 'The term 'maintenance', with respect to instructional and 
research equipment obtained with funding under this title, shall 
mean the care necessary to the optimal functioning of such 
equipment. With respect to the equipment and structural 
changes related to obtaining and sustaining the necessary 
environment (ventilation, etc.) for proper functioning of instruc-
tional and research equipment, 'maintenance' shall mean that 
portion of care above and beyond normal overhead costs. 
"(5) The term 'Federal share' means in the case of any project 
a percentage (as determined under the applicable State plan) 
not in excess of 50 percent of its development cost. 
''(6) The term 'higher education building agency' means (A) 
an agency, public authority, or other instrumentality of a State 
authorized to provide, or finance the construction, reconstruc-
O
S 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1545 
tion, or renovation of, academic facilities for institutions of 
higher education (whether or not also authorized to provide or 
finance other facilities for such or other educational institu-
tions, or for their students or faculty), or (B) any corporation (no 
part of the net earnings of which inures or may lawfully inure 
''^* 
to the benefit of any private shareholder or individual (i) estab-
lished by an institution of higher education for the sole purpose 
of providing academic facilities for the use of such institution, 
and (ii) upon dissolution of which, all title to any property 
purchased or built from the proceeds of any loan made under 
part C will pass to such institution), or (C) an institution of 
postsecondary education. 
"(7) The term 'public community college and public technical 
institute' means an institution of higher education which is 
under public supervision and control, and is organized and 
administered principally to provide a 2-year program which is 
acceptable for full credit toward a bachelor's degree, or a 2-year 
program in engineering, mathematics, or the physical or bio-
logical sciences which is designed to prepare the student to 
work as a technician and at a semiprofessional level in 
engineering, scientific, or other technological fields which re-
quire the understanding and application of basic engineering, 
scientific, or mathematical principles or knowledge; and the 
term includes a branch of an institution of higher education 
offering 4 or more years of higher education which is located in 
a community different from that in which its parent institution 
r - jgy o 
is located. 
' 
"(8) The term 'public educational institution' does not include 
a school or institution of any agency of the United States. 
"(9) The term 'State' includes in addition to the several States 
of the Union, the Commonwealth of Puerto Rico, the District of 
Columbia, Guam, American Samoa, the Virgin Islands, and the 
Trust Territory of the Pacific Islands. 
t 
"SALES OF OBLIGATIONS REQUIRED 
"SEC. 783. The Secretary shall sell, at public or private sale, 
20 USC ii32i-2. 
obligations held under parts C and F of this title upon such terms as 
the Secretary may fix and in such amounts as the Secretary deter-
mines will carry out the directions in the concurrent resolution on 
the budget for the fiscal year 1987 (S. Con. Res. 120, 99th Congress, 
agreed to June 27, 1986), but the Secretary shall not sell obligations 
having a market value of more than $579,000,000 in fiscal year 1987 
and more than $314,000,000 in fiscal year 1988.". 
SEC. 702. CONFORMING PROVISION. 
Title IV of the Housing Act of 1950 is repealed. 
12 use 1749-
1749c. 
TITLE VIII—COOPERATIVE EDUCATION 
SEC. 801. COOPERATIVE EDUCATION REAUTHORIZED. 
Title VIII of the Act is amended to read as follows: 
• I i . l 1 
.: 
100 STAT. 1546 
PUBLIC LAW 99-498—OCT. 17, 1986 
V. .«.. 
"TITLE VIII—CCX)PERATIVE EDUCATION 
--: 
"APPROPRIATIONS AUTHORIZED; RESERVATIONS -
20 use 1133. 
"SEC. SOL (a) APPROPRIATIONS AUTHORIZED.—There are authorized 
to be appropriated to carry out this title $17,000,000 for fiscal year 
1987, and such sums as may be necessary for each of the 4 succeed-
ing fiscal years. 
"(b) RESERVATIONS.—Of the amounts appropriated in each fiscal 
year— 
"(1) not less than 75 percent shall be available for carrying 
out grants to institutions of higher education and combinations 
of such institutions for cooperative education under section 802; 
"(2) not to exceed 12V2 percent shall be available for dem-
onstration projects under paragraph (1) of section 803(a); 
"(3) not to exceed 10 percent shall be available for training 
and resource centers under paragraph (2) of section 803(a); and 
"(4) not to exceed 2^2 percent shall be available for research 
under paragraph (3) of section 803(a). 
"(c) AvAiLABiUTY OF APPROPRIATIONS.—Appropriations under this 
title shall not be available for the payment of compensation of 
students for employment by employers under arrangements pursu-
ant to this title. 
"GRANTS FOR COOPERATIVE EDUCATION PROGRAMS 
20 use 1133a. 
"SEC. 802. (a) GRANTS AUTHORIZED; MAXIMUM AMOUNT OF 
GRANT.—(1) The Secretary is authorized, from the amount available 
under section 801(bXl) in each fiscal year and in accordance with the 
provisions of this title, to make grants to institutions of higher 
education, or to combinations of such institutions, to pay the Federal 
share of the cost of planning, establishing, expanding, or carrying 
out programs of cooperative education by such institutions or com-
binations of institutions. 
"(2)(A) Cooperative education programs assisted under this section 
shall provide alternating or parallel periods of academic study and 
of public or private employment, giving work experience related to 
their academic or occupational objectives and the opportunity to 
earn the funds necessary for continuing and completing their edu-
cation. 
"(B) The amount of each grant shall not exceed $500,000 to any 
institution of higher education or combination of such institutions 
in any fiscal year. 
"(b) APPUCATIONS.—Each institution of higher education, or com-
bination of institutions desiring to receive a grant under this title 
shall submit an application to the Secretary at such time and in 
such manner as the Secretary shall prescribe. Each such application 
shall— 
"(1) set forth the program or activities for which a grant is 
authorized under this section; 
"(2) specify each portion of such program or activities which 
will be performed by a nonprofit organization or institution 
other than the applicant and the compensation to be paid for 
such performance; 
"(3) provide that the applicant will expend during such fiscal 
year for the purpose of such program or activities not less than 
3U 
•-Qi-'>- 
! ? : ' ! 
.*ei.vi 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1547 
the amount expended for such purpose during the previous 
fiscal year; 
"(4) describe the plans which the applicant will carry out to 
assure that the applicant will continue the cooperative edu-
cation program beyond the 5-year period of Federal assistance 
described in subsection (cXD; 
"(5) provide that, in the case of an institution of higher 
education that provides a 2-year program which is acceptable 
for full credit toward a bachelor's degree, the cooperative edu-
cation program will be available to students who are certificate 
candidates and who carry at least one-half the normal full time 
academic workload; 
"(6) provide that the applicant will— 
"(A) make such reports as may be essential to insure that 
0* J 
the applicant is complying with the provisions of this sec-
tion, including in the reports for the second and each 
Btlj 
succeeding fiscal 3^ear for which the applicant receives a 
grant data with respect to the impact of the cooperative 
ff? >' 
education program in the previous fiscal year, including— 
"(i) the number of students enrolled in the coopera-
tive education program, 
"(ii) the number of employers involved in the pro-
gram, 
"(iii) the income of the students enrolled, and 
"(iv) the increase or decrease of enrollment in the 
program in the second previous year compared to such 
previous fiscal year; and 
"(B) keep such records as are essential to insure that the 
applicant is complying with the provisions of this title; 
"(7) provide for such fiscal control and fund accounting proce-
dures as may be necessary to assure proper disbursement of, 
and accounting for, Federal funds paid to the applicant under 
this title; and 
"(8) include such other information as is essential to carry out 
the provisions of this title. 
"(c) DURATION OF GRANTS; FEDERAL SHARE.—(1)(A) Except as pro- 
. , . ^: ,.T| 
vided in paragraph (3), no individual unit of an institution of higher 
^ 
education may receive, individually or as a participant in a combina- 
'• 
tion of such institutions, grants under this section for more than 5 
fiscal years. 
"(B) The limitation contained in subparagraph (A) shall apply to 
each institution of higher education or participant in a combination 
of such institutions whether the grant was received before or after 
the date of enactment of the Higher Education Amendments of 
1986. 
"(2) The Federal share of a grant under this section may not 
exceed— 
^ 
"(A) 90 percent of the cost of carrying out the application in 
! 
the first year the applicant receives a grant under this section; 
"(B) 80 percent of such cost in the second such year; 
- 
"(C) 70 percent of such cost in the third such year; 
' 
"(D) 60 percent of such cost in the fourth such year; and 
"(E) 30 percent of such cost in the fifth such year. 
"(3) Any institution of higher education, or participant in a com-
bination of such institutions which— 
"(A) has received a grant for 5 fiscal years under this section; 
100 STAT. 1548 
PUBLIC LAW 99-498—OCT. 17, 1986 
Handicapped 
persons. 
Minorities. 
gj>^; "(B) ijag conducted without Federal £issistance a cooperative 
education program for at least 2 academic years subsequent to 
the end of the fifth such fiscal year; 
"(C) has expended for the cooperative education program for 
each such subsequent academic year an amount at least equal 
to the total cost of the program in the fifth fiscal year in which 
the institution, or participant, received assistance under this 
section; and 
"(D) provides statistics in the application required under 
subsection (b) on the number of students enrolled in the co-
operative education program, the number of institutional 
personnel, including faculty advisers and cooperative education 
coordinators, and the income of the students enrolled, for each 
such year; 
may apply under subsection (b) as an institution, or participant, to 
which subparagraph (A) of paragraph (2) applies. 
"(4) Any provision of law to the contrary notwithstanding, the 
Secretary shall not waive the provisions of this subsection. 
"(d) FACTORS FOR SPECIAL CONSIDERATION OF APPUCATIONS.—(1) In 
approving applications under this section, the Secretary shall give 
special consideration to applications from institutions of higher 
education for programs which show the greatest promise of success 
because of^ 
"(A) the extent to which programs in the academic discipline 
with respect to which the application is made have had a 
favorable reception by public and private sector employers, 
"(B) the commitment of the institution of higher education to 
cooperative education has demonstrated by the plans which 
such institution has made to continue the program after the 
termination of Federal financial assistance, 
"(C) the extent to which the institution is committed to 
extending cooperative education on an institution-wide basis for 
all students who can benefit, and 
"(D) such other factors as are consistent with the purposes of 
this section. 
"(2) The Secretary shall also give special consideration to applica-
tions from institutions of higher education or combinations thereof 
which demonstrate a commitment to serving special populations 
such as women, the handicapped and Black, Mexican American 
Puerto Rican, Cuban, other Hispanic, American Indian, Alaska 
Native, Aleut, Native Hawaiian, American Samoan, Micronesian, 
Guamian (Chamorro), and Northern Marianian students. 
Grants. 
Contracts. 
20 use 1133b. 
DEMONSTRATION AND INNOVATION PROJECTS; TRAINING AND 
RESOURCE CENTERS; AND RESEARCH 
;« 
. 
"SEC. 803. (a) AUTHORIZATION.—The Secretary is authorized, in 
accordance with the provisions of this section, to make grants and 
enter into contracts for— 
"(1) the conduct of demonstration projects designed to dem-
onstrate or determine the feasibility or value of innovative 
i, 
methods of cooperative education from the amounts available in 
each fiscal year under section 801(bX2); 
a 
"(2) the conduct of training and resource centers designed 
to— 
;noiito.. 
"(A) train personnel in the field of cooperative education; 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1549 
i, 
"(B) improve materials used in cooperative education 
programs; 
"(C) furnish technical assistance to institutions of higher 
education to increase the potential of the institution to 
continue to conduct a cooperative education program with-
*
« 
out Federal assistance; 
^^ • - ^'^ - ^-
"(D) encourage model cooperative education programs 
f- 
which furnish education and training in occupations in 
Ilii.;. 
which there is a national need; and 
"(E) support partnerships under which an institution 
carrying out a comprehensive cooperative education pro-
~i 
gram joins with another institution of higher education in 
order to (i) assist the institution other than the comprehen-
•t&i I 
sive cooperative education institution to develop and 
expand an existing program of cooperative education, or (ii) 
b " 
establish and improve or expand comprehensive coopera-
: 
tive education programs, 
from the amounts available in each fiscal year under section 
801(b)(3); and 
f 
"(3) the conduct of research relating to cooperative education, 
from the amounts available in each fiscal year under section 
801(b)(4). 
"(b) ADMINISTRATIVE PROVISION.—To carry out this section, the 
Secretary may— 
"(1) make grants to or contracts with institutions of higher 
education, or combinations of such institutions, and 
-' 
"(2) make grants to or contracts with other public or private 
nonprofit agencies or organizations, whenever such grants or 
contracts will make an especially significant contribution to 
attaining the objectives of this section. 
"(c) SUPPLEMENT NOT SUPPLANT.—A recipient of a grant or con-
tract under this section may use the funds provided only so as to 
supplement and, to the extent possible, increase the level of funds 
that would, in the absence of such funds, be made available from 
non-Federal sources to carry out the activities supported by such 
grant or contract, and in no case to supplant such funds from non-
Federal sources.". 
TITLE IX—GRADUATE EDUCATION 
.i«lj ')t-
SEC. 901. REVISION OF TITLE IX. 
(a) AMENDMENT.—Title IX of the Act is amended to read as 
j, 
follows: 
"TITLE IX—GRADUATE PROGRAMS 
g 
"PART A—GRANTS TO INSTITUTIONS TO ENCOURAGE MINORITY 
PARTICIPATION IN GRADUATE EDUCATION 
.^ 
"PROGRAM AUTHORIZED 
"SEC. 901. The Secretary shall make grants to institutions of 
20 use 1134. 
higher education to enable such institutions to identify talented 
undergraduate students who demonstrate financial need and are 
from minority groups underrepresented in graduate education, 
and provide such students with an opportunity to participate 
in a program of research and scholarly activities at such institution 
-JHO OS 
100 STAT. 1550 
PUBLIC LAW 99-498—OCT. 17, 1986 
designed to provide such students with effective preparation for 
graduate study in such Held or related fields. 
"SUBMISSION AND CONTENTS OF APPUCATIONS 
20 use 1134a. 
"SEC. 902. (a) REQUIRED INFORMATION.—Each institution of higher 
education shall submit an application under this part to the Sec-
retary in such form and containing such information as the Sec-
retary m ^ by regulation prescnribe. Each such application shall 
provide information regarding— 
"(1) the program of study, to take the form of summer re-
search internships, seminars, and other educational experi-
ences; 
"(2) the institution's plan for identifying and recruiting tal-
ented minority undergraduates; 
"(3) the participation of faculty in the program and a detailed 
description of the research in which students will be involved; 
no 
"(4) a plan for the evaluation of the effectiveness of the 
program; and 
"(5) such other assurances and information as the Secretary 
may require by r^ulation. 
"(b) SELECTION REQUIREMENTS.—In making awards to institu-
tions— 
"(1) the Secretary shall consider the quality of the research in 
' which students will be involved as well as the recruitment 
program and program of study; and 
"(2) the Secretary shall ensure an equitable geographic dis-
tribution among public and private institutions of higher edu-
oi cation. 
Ijn 
" U S E OP FUNDS 
'>" 
20 use 1134b. 
"SEC. 903. Awards made to institutions under this part shall be 
used exclusively to provide direct fellowship aid which may include 
need-based stipends, room and board costs, transportation costs, and 
tuition for courses for which credit is given by the institution as 
approved by the Secretary. 
"PART B—PATRICIA ROBERTS HARRIS FELLOWSHIPS 
STATEMENT OF PURPOSE; DESIGNATION OF AWARDS 
• ^.' -8 
20 use ii34d. 
"SEC. 921. (a) PURPOSE.—It is the purpose of this part to provide, 
through institutions of higher education, a program of grants to 
assist in making available the benefits of a post-baccalaureate edu-
cation to graduate and professional students who demonstrate finan-
cial need. 
"(b) DESIGNATION.—Each recipient of such an award under this 
part shall be known as a 'Patricia Roberts Harris Fellow'. 
"PROGRAM AUTHORIZED 
20 use ii34e. 
"SEC. 922. (a) GRANTS BY SECRETARY.—The Secretary shall make 
grants to institutions of higher education to enable such institutions 
to make grants in accordance with the provisions of this part. 
"(b) DISTRIBUTION AND AMOUNTS OF GRANTS.—(1) In making such 
grants the Secretary shall, to the maximum extent feasible, ensure 
an equitable geographic distribution of awards and an equitable 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1551 
distribution among eligible public and independent institutions of 
higher education. 
"(2) Whenever the Secretary determines that an institution of 
higher education is unable to use all of the amounts available to it 
under this part, the Secretary shall, on such dates during each fiscal 
year as the Secretary may fix, reallot such amounts not needed to 
institutions which can use the grants authorized by this part. 
"(c) APPLICATIONS.—Any eligible institution of higher education 
offering a program of post-baccalaureate study leading to a graduate 
or professional degree may apply for grants under this part. Each 
" 
*
" -
such institution may make an application to the Secretary at such 
time, in such manner, and containing or accompanied by such 
information as the Secretary may reasonably require. Such applica-
tion may be made on behalf of professional schools, academic depart-
ments, or similar organizational units within such institution meet-
ing the requirements of this subsection, including interdisciplinary 
or interdepartmental programs. 
"(d) SELECTION OF APPUCATIONS.—In making grants to institutions 
of higher education, the Secretary shall— 
"(1) take into account present and projected needs for highly 
'^ 
trained individuals in all areas of education beyond secondary 
1 
school; 
& 
"(2) take into account present and projected needs for highly 
trained individuals in other than academic career fields of high 
' 
national priority; and 
"(3) consider the need to prepare a larger number of Individ- Minorities. 
uals from minority groups, especially from among such groups 
which have been traditionally underrepresented in colleges and 
universities, but nothing contained in this paragraph shall be 
interpreted to require any institution to grant preference or 
'^' 
disparate treatment to the members of one minority group on 
account of an imbalance which may exist with respect to the 
total number or percentage of individuals of such group partici-
pating in or receiving the benefits of the program authorized in 
this section, in comparison with the total number or percentage 
of individuals of such group in any community, State, section, or 
other area. 
"(e) PRIORITIES FOR FELLOWSHIPS.—The Secretary shall assure 
that, in making grants under this part, awards are made to— 
"(1) individuals who plan to pursue a career in public service; 
''''•' '- • 
and 
"(2) individuals from traditionally underrepresented groups, 
as determined by the Secretary, undertaking graduate or 
professional study. 
The Secretary shall assure that the amount expended for categories 
of fellowships described in paragraphs (1) and (2) of this subsection 
for each fiscal year is not less than the amount expended for each 
category in fiscal year 1985. 
"(^ INSTITUTIONAL PAYMENTS.—From sums required to be ex-
pended by the Secretary for grants under subsection (e), the Sec-
retary shall (in addition to the awards made to individuals) pay to 
the institution of higher education at which such individual is 
pursuing his or her course of study such amounts as are paid under 
similar fellowship programs administered through the National 
Science Foundation and other similar agencies, except that such 
amount charged to a fellowship recipient and collected from such 
recipient by the institution for tuition and other expenses required 
100 STAT. 1552 
PUBLIC LAW 99-498—OCT. 17, 1986 
by the institution as part of the recipient's instructional program 
shall be deducted from the payments to the institution under this 
subsection. 
"(g) USE FOR REUGIOUS PURPOSES PROHIBITED.—No fellowship 
shall be awarded under this part for study at a school or department 
of divinity. 
"AWARD OF FELLOWSHIPS 
20 use ii34f. 
"SEC. 923. (a) AWARDS BASED ON NEED.—An institution of higher 
education receiving funds under this part shall make available to 
financially needy graduate and professional students an award 
determined by such institution of higher education, except that no 
award under this part may exceed the lesser of $10,000, or the 
demonstrated level of financial need as determined under part F of 
title IV of this Act. 
"(b) REQUIREMENTS FOR AWARD.—No student shall receive an 
award except during periods in which such student is maintaining 
satisfactory progress in, and devoting essentially full time to, study 
or research (including acting as a teaching assistant or research 
assistant as may be required as a condition to award of a degree) in 
the field in which such fellowship was awarded and is not engaging 
in gainful emplojmient, other than part-time employment by the 
institution of higher education involved in teaching, research, or 
similar activities, approved by the Secretary. Such period shall not 
Siiiisoiii!/! 
exceed a total of 3 years, except that the Secretary may provide by 
regulation for the granting of such fellowships for a period of study 
not to exceed one 12-month period, in addition to the 3-year period 
set forth in this section, under special circumstances which the 
Secretary determines would most effectively serve the purposes of 
this part. The Secretary shall make a determination to provide such 
12-month extension of an award to an individual fellowship 
recipient upon review of an application for such extension by the 
recipient. 
"PART C—JACOB K. JAVITS FELLOWS PROGRAM 
"AWARD OF NATIONAL GRADUATE FELLOWSHIPS 
20 use ii34h. 
"SEC. 931. (a) NUMBER AND TIMING OF AWARDS.—The Secretary is 
authorized to award not more than 450 fellowships per year in 
accordance with the provisions of this part for graduate study in the 
arts, humanities, and social sciences by students of superior ability 
selected on the basis of demonstrated achievement and exceptional 
promise. All funds appropriated in a fiscal year shall be obligated 
and expended to the students for fellowships for use in the academic 
year beginning after July 1 of the fiscal year for which the funds 
were appropriated. The fellowships shall be awarded for only one 
academic year of study and shall be renewable for a period not to 
exceed 4 years of study. 
"(b) DESIGNATION OF FELLOWS.—Students receiving awards under 
this part shall be known as 'Jacob K. Javits Fellows'. 
"(c) INTERRUPTIONS OF STUDY.—The institution of higher edu-
cation may allow a fellowship recipient to interrupt periods of study 
for a period not to exceed 12 months for the purpose of work, travel, 
or independent study away from the campus, if such independent 
study is supportive of the fellowship recipient's academic program 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1553 
and shall continue payments for those 12-month periods during 
which the student is pursuing travel or independent study support-
ive of the recipient's academic program. 
"ALLOCATION OF FELLOWSHIPS 
"SEC. 932. (a) FELLOWSHIP BOARD.—(1) The Secretary shall appoint 
20 USC ll34i. 
a National Graduate Fellows Program Fellowship Board consisting 
of not less than 9 and not more than 15 individuals prior to July 31, 
1987, 13 individuals after July 31, 1987, and prior to August 1, 1989, 
11 individuals after July 31, 1989, and prior to August 1, 1991, and 9 
individuals after July 31, 1991, representatives of both public and 
private institutions of higher education especially qualified to serve 
on the Board. In making appointments, the Secretary shall give due 
consideration to the appointment of individuals who are highly 
respected in the academic community. The Secretary shall assure 
that individuals appointed to the Board are broadly knowledgeable 
about and have experience in doctoral education in arts, humanities, 
J^^-'i >
B
l
J ' 
and social sciences. 
"(2) The Board shall— 
"(A) establish general policies for the program established by 
this part and oversee its operation; 
^ 
"(B) establish general criteria for the distribution of fellow-
f 
ships among eligible academic fields identified by the Board; 
"(C) appoint panels of academic scholars with distinguished 
backgrounds in the arts, humanities, and social sciences for the 
J 
purpose of directing fellows; and 
i 
"(D) prepare and submit to the Congress at least once in every Reports. 
3-year period a report on any modifications in the program that 
the Board determines are appropriate. 
' 
"(3) In carrying out its responsibilities, the Board shall consult on 
a regular basis with representatives of the National Science Founda-
tion, the National Endowment for the Humanities, the National 
Endowment for the Arts, and representatives of institutions of 
higher education and associations of such institutions, learned soci-
eties, and professional organizations. 
"(4) The term of office of each member of the Board shall be 4 
years; except that any member appointed to fill a vacancy shall 
serve for the remainder of the term for which the predecessor of the 
member was appointed. No member may serve for a period in excess 
of 6 years. 
.Aidv Jci> >;. 
"(5) The Secretary shall call the first meeting of the Board, at 
which the first order of business shall be the election of a Chairman 
and a Vice Chairman, who shall serve until one year after the date 
of their appointment. Thereafter each officer shall be elected for a 
term of 2 years. In case a vacancy occurs in either office, the Board 
shall elect an individual from among the members of the Board to 
fill such vacancy. 
"(6XA) A majority of the members of the Board shall constitute a 
quorum. 
"(B) The Board shall meet at least once a year or more frequently, 
as may be necessary, to carry out its responsibilities. 
"(7) Members of the Board, while serving on the business of the 
Board, shall be entitled to receive compensation at rates fixed by the 
Secretary, but not exceeding the rate prescribed for GS-18 of the 
General Schedule under section 5332, title 5, United States Code, 
including traveltime; and while so serving away from their homes or 
100 STAT. 1554 
PUBLIC LAW 99-498—OCT. 17, 1986 
regular places of business, they may be allowed travel expenses, 
including per diem in lieu of subsistence, as authorized by section 
5703 of title 5, United States Code, for persons in Government 
service employed intermittently. 
"(b) USE OF SELECTION PANELS.—The recipients of fellowships 
shall be selected in each designated field from among all applicants 
n ; • )?.. 05: 
nationwide in each field by distinguished panels appointed by the 
Fellowship Board to make such selections under criteria established 
by the Board. The number of recipients in each field in each year 
shall not exceed the number of fellows allocated to that field for that 
year by the Fellowship Board. 
"(c) FELLOWSHIP PORTABILITY.—Each recipient shall be entitled to 
use the fellowship in a doctoral program at any accredited institu-
tion of higher education in which the recipient may decide to enroll. 
3ii.?':.:e :;'• :" 
"STIPENDS 
:''«*ioe sni -Ai^ I;»£A'' <':U 
20 use 1134J. 
"SEC. 933. (a) AWARD BY SECRETARY.—The Secretary shall pay to 
individuals awarded fellowships under this part such stipends 
(including such allowances for subsistence and other expenses for 
such individuals and their dependents) as the Secretary may deter-
mine to be appropriate, adjusting such stipends as necessary so as 
not to exceed the fellow's demonstrated level of need according to 
measurements of need approved by the Secretary. The stipend levels 
established by the Secretary shall reflect the purpose of this pro-
gram to encourage highly talented students to undertake graduate 
study and shall provide a level of support comparable to that 
v
r CHH 
provided by federally funded graduate fellowships in the science and 
engineering fields. 
"(b) INSTITUTIONAL PAYMENTS.—(1) The Secretary shall (in addi-
tion to the stipends paid to individuals under subsection (a)) pay to 
the institution of higher education, for each individual awarded a 
fellowship for pursuing a course at such institution, $6,000. 
"(2) Subject to the availability of appropriations, amounts payable 
to an institution by the Secretary pursuant to this subsection shall 
not be reduced for any purpose other than the purposes specified 
under paragraph (1). 
-vs: 
"FELLOWSHIP CONDITIONS ' 
\ 
., -
20 use 1134k. 
"SEC. 934. (a) 
REQUIREMENTS 
FOR 
RECEIPT.—An 
individual 
awarded a fellowship under the provisions of this part shall con-
tinue to receive payments provided in section 933 only during such 
periods as the Secretary finds that he is maintaining satisfactory 
proficiency in, and devoting essentially full time to, study or re-
search in the field in which such fellowship was awarded, in an 
institution of higher education, and is not engaging in gainful 
employment other than part-time employment by such institution 
in teaching, research, or similar activities, approved by the Sec-
retary. 
"Ot)) REPORTS FROM RECIPIENTS.—The Secretary is authorized to 
require reports containing such information in such form and to file 
at such times as the Secretary determines necessary from any 
person awarded a fellowship under the provisions of this part. The 
reports shall be accompanied by a certificate from an appropriate 
official at the institution of higher education, library, archive, or 
other research center approved by the Secretary, stating that such 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1555 
individual is making satisfactory progress in, and is devoting essen-
tially full time to the program for which the fellowship was 
awarded. 
"PART D—GRADUATE ASSISTANCE IN AREAS OF NATIONAL NEED 
"PURPOSE 
"SEC. 941. In order to sustain and enhance the capacity for 20 USC1134/. 
teaching and research in areas of national need, it is the purpose of 
this part to provide, through academic departments and programs of 
institutions of higher education, a fellowship program to assist 
graduate students of superior ability who demonstrate financial 
need. 
, ., - . 
"GRANTS TO ACADEMIC DEPARTMENTS AND PROGRAMS OF INSTITUTIONS 
"SEC. 942. (a) GRANT AUTHORITY.—(1) The Secretary shall make 20 USC ii34m. 
grants to academic departments and programs and other academic 
units of institutions of higher education that provide courses of 
study leading to a graduate degree in order to enable such institu-
tions to provide assistance to graduate students in accordance with 
this part. 
"(2) The Secretary may also make grants to such departments and 
programs and to other units of institutions of higher education 
granting graduate degrees which submit joint proposals involving 
nondegree granting institutions which have formal arrangements 
for the support of doctoral dissertation research with degree-grant-
ing institutions. Nondegree granting institutions eligible for awards 
as part of such joint proposals include any organization which— 
"(A) is described in section 501(cX3) of the Internal Revenue 
Code of 1954, and is exempt from tax under section 501(a) of 
such Code; 
"(B) is organized and operated substantially to conduct sci-
entific and cultural research and graduate training programs; 
"(C) is not a private foundation; 
"(D) has academic personnel for instruction and counseling 
.;-;: 
who meet the standards of the institution of higher education in 
which the students are enrolled; and 
"(E) has necessary research resources not otherwise readily 
available in such institutions to such students. 
"(b) AWARD AND DURATION OF GRANTS.—(1) The principal cri-
terion for the allocation of awards shall be the relative quality of the 
graduate programs presented in competing applications. Consistent 
with an allocation of awards based on quality of competing applica-
tions, the Secretary shall, in making such grants, promote an equi-
table geographic distribution among eligible public and private 
institutions of higher education. 
"(2) The Secretary shall approve a grant recipient under this part 
for a 3-year period. From the sums appropriated under this part for 
any fiscal year, the Secretary shall not make a grant to any aca-
demic department or program of an institution of higher education 
of less than $100,00(3 or greater than $500,000 per fiscal year 
"(3) Whenever the Secretary determines that an academic depart-
ment or program of an institution of higher education is unable to 
use all of the amounts available to it under this part, the Secretary 
shall, on such dates during each fiscal year as the Secretary may fix. 
71-19/4 0 - 89 - 16 : QL. 3 Part2 
100 STAT. 1556 
PUBLIC LAW 99-498—OCT. 17, 1986 
reallot the amounts not needed to academic departments and pro-
grams of institutions which can use the grants authorized by this 
part. 
"(c) PREFERENCE TO CONTINUING GRANT RECIPIENTS.—(1) The Sec-
retary shall make new grant awards under this part only to the 
extent that each previous grant recipient has received continued 
funding in accordance with subsection (bX2). 
"(2) To the extent that appropriations under this part are insuffi-
> 
cient to comply with paragraph (1), available funds shall be distrib-
uted by ratably reducing the amounts required to be awarded by 
subsection (bX2). 
INSTITUTIONAL EUGIBIUTY 
20 use ii34n. 
"SEC. 943. (a) EuGiBiLiTY CRITERIA.—Any academic department or 
program of an institution of higher education that offers a program 
of post-baccalaureate study leading to a graduate degree in an area 
of national need (as designated under subsection (b)) may apply for a 
Grant. 
grant under this part. No department or program shall be eligible 
for a grant unless the program of post-baccalaureate study has been 
in existence for at least 4 years at the time of application for 
assistance under this part. 
"(b) DESIGNATION OF AREAS OF NATIONAL NEED.—After consulta-
tion with the National Science Foundation, the National Academy 
of Sciences, the National Endowments for the Arts and the Human-
ities, and other appropriate Federal and nonprofit agencies and 
organizations, the Secretary shall designate areas of national need, 
such as mathematics, biology, physics, chemistry, engineering, geo-
sciences, computer science, or foreign languages or areas studies. In 
making such designations, the Secretary shall take into account the 
extent to which the interest is compelling and the extent to which 
other Federal programs support post-baccalaureate study in the 
area concerned. 
Grants. 
20 u s e 11340. 
. 
CRITERIA FOR APPUCATIONS 
,, 
"SEC. 944. (a) SELECTION OF APPLICATIONS.—The Secretary shall 
make grants to academic departments and programs of institutions 
of higher education on the basis of applications submitted in accord-
ance with subsection (b). Applications shall be ranked on program 
quality by geographically balanced review panels of nationally rec-
ognized scholars. To the extent possible (consistent with other provi-
sions of this section), the Secretary shall make awards that are 
consistent with recommendations of the review panels. 
"(b) CONTENTS OF APPUCATIONS.—An academic department or 
program of an institution of higher education, in its application for a 
grant, shall— 
"(1) describe the current academic program of the applicant 
for which the grant is sought; 
'*i 
"(2) provide assurances that the applicant will provide, from 
other non-Federal funds, for the purposes of the fellowship 
program under this part an amount equal to at least 25 percent 
of the amount of the grant received under this part; 
"(3) set forth policies and procedures to assure that, in 
making fellowship awards under this part the institution will 
seek talented students from traditionally underrepresented 
backgrounds, as determined by the Secretary; 
n 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1557 
"(4) set forth policies and procedures to assure that, in 
making fellowship awards under this part, the institution will 
make awards to individuals who— 
•.h.y 
-,; 
>: i o 
"(A) have financial need, as determined under criteria 
developed by the institution; 
"(B) have excellent academic records in their previous 
programs of study; 
"(C) plan teaching or research careers; and 
' 
"(D) plan to pursue the highest possible degree available 
in their course of study; 
"(5) set forth policies and procedures to ensure that Federal 
funds made available under this part for any fiscal year will be 
used to supplement and, to the extent practical, increase the 
funds that would otherwise be made available for the purpose of 
this part and in no case to supplant those funds; 
"(6) provide assurances that, in the event that funds made 
,;, 
? 
available to the academic department or program under this 
part are insufficient to provide the assistance due a student 
under the commitment entered into between the academic 
department or program and the student, the academic depart-
ment or program will endeavor, from any funds available to it, 
to fulfill the commitment to the student; 
4
* 
"(7) provide that the applicant will comply with the limita-
^' 
tions set forth in section 945; and 
"(8) include such other information as the Secretary may 
prescribe. 
"AWARDS TO GRADUATE STUDENTS 
"SEC. 945. (a) COMMITMENTS TO GRADUATE STUDENTS.—(1) From at 
20 USC ll34p. 
least 60 percent of the funds received under this part, an academic 
department or program of an institution of higher education shall 
make commitments to graduate students at any point of their 
graduate study to provide stipends for the length of time necessary 
for a student to complete the course of graduate study, but in no 
case longer than 5 years. 
"(2) No such commitments shall be made to students under this 
part unless the academic department or program has determined 
adequate funds are available to fulfill the commitment either from 
funds received or anticipated under this part, or from institutional 
funds. 
"(b) AMOUNT OF STIPENDS.—The size of the stipend awarded to 
students for an individual academic year shall be determined by the 
institution, except that no annual stipend award under this part 
may exceed $10,000, or the demonstrated level of need (according to 
criteria of need developed by the institution), whichever is less. 
"(c) ACADEMIC PROGRESS REQUIRED.—Notwithstanding the provi-
sions of subsection (a), no student shall receive an award (1) except 
during periods in which such student is maintaining satisfactory 
progress in, and devoting essentially full time to, study or research 
in the field in which such fellowship was awarded, or (2) if the 
student is engaging in gainful employment other than part-time 
employment involved in teaching, research, or similar activities 
determined by the institution to be in support of the student's 
progress towards a degree. 
100 STAT. 1558 
PUBLIC LAW 99-498—OCT. 17, 1986 
ADDITIONAL ASSISTANCE FOR COST OF EDUCATION 
20 use ii34q. 
"SEC. 946. (a) USE FOR TUITION AND FEES.—From the remainder of 
the funds received under this part after complying with the require-
ments of section 945, the academic department or program of an 
institution of higher education may award fellowship recipients 
under section 945 additional amounts to pay the recipients' tuition 
and fees and other costs of education. 
"(b) USE FOR OVERHEAD PROHIBITED.—Funds made available 
pursuant to this part may not be used for the general operational 
overhead of the academic department or program. 
"PART E—ASSISTANCE FOR TRAINING IN THE LEGAL PROFESSION 
"PROGRAM AUTHORIZED 
20 use ll34r. 
"SEC. 951. (a) GRANTS AND CONTRACTS.—The Secretary is au-
thorized to make grants to, or enter into contracts with, public and 
private agencies and organizations other than institutions of higher 
education for the purpose of assisting individuals from disad-
vantaged backgrounds, as determined in accordance with criteria 
prescribed by the Secretary, to undertake training for the legal 
profession. 
"(b) USE OF FUNDS.—Grants made, and contracts entered into, 
under subsection (a) may cover, in accordance with regulations of 
the Secretary, all or part of the cost of— 
"(1) selecting individuals from disadvantaged backgrounds for 
training for the legal profession, 
"(2) facilitating the entry of such individuals into institutions 
of higher education for the purpose of pursuing such training, 
- 
"(3) providing counseling or other services designed to assist 
such individuals to complete successfully such training, 
"(4) providing, for not more than 6 months prior to the entry 
of such individuals upon their courses of training for the legal 
Tu profession, preliminary training for such individuals designed to 
i 
assist them to complete successfully such training for the legal 
profession, 
;n ; 
"(5) paying such stipends (including allowances for travel and 
;) 
for dependents) as the Secretary may determine for such 
individuals for any such period of preliminary training or for 
any period of training for the legal profession during which 
such individuals maintain satisfactory academic proficiency, as 
determined by the Secretary, and 
J|. 
"(6) paying for administrative activities of the agencies and 
,,J 
organizations which receive such grants, or with which such 
!
^
J ' contracts are entered into, to the extent such activities are for 
the purpose of furthering activities described in paragraphs (1) 
^ 
through (5). 
^'^ 
"PART F—LAW SCHOOL CUNICAL EXPERIENCE PROGRAMS 
State and local 
governments. 
20 u s e 1134s. 
PROGRAM AUTHORIZATION 
"SEC. 961. (a) GRANT AND CONTRACT PURPOSES.—The Secretary is 
authorized to enter into grants or contracts with accredited law 
schools in the States for the purpose of pajdng not to exceed 90 per 
centum of the costs of establishing or expanding programs in such 
schools to provide clinical experience to students in the practice of 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1559 
law, which includes any form of law student work involving 
performance in the role of a lawyer exercising legal skills and roles 
such as those of an advocate, counselor, negotiator, investigator, and 
ethical practitioner, whether by way of the provision of repre-
sentation of or services to an identifiable client in actual cases or 
situations (subject to existing State or local limitations upon such 
provision) or by way of simulation of such provision through appro-
priate exercises. Preference shall be given to those programs provid-
ing legal experience in the preparation and trial of actual cases, 
including administrative cases and the settlement of controversies 
outside the courtroom. The cases and situations handled in actuality 
or by simulation may encompass any one or more of the following: 
"(1) judicial, administrative, executive, or legislative proceed-
ings, including the full range of preparation therefor; 
"(2) office or house counsel problems; or 
"(3) factual investigation, empirical research, or policy or 
* 
legal analysis. 
"(b) USE OF FuNDS.^Such costs may include necessary expendi-
tures incurred for— 
"(1) planning; 
"(2) training of faculty members and salary for additional 
faculty members; 
"(3) travel and per diem for faculty and students; 
"(4) reasonable stipends for students for work in the public 
service performed as part of any such program at a time other 
than during the regular academic year; 
"(5) equipment and library resources; 
"(6) involving practicing lawyers in the process of training 
£
. 
law students to perform as lawyers; and 
"(7) such other items as are allowed pursuant to regulations 
issued by the Secretary. 
"(c) LIMITATIONS ON AMOUNTS.—No law school may receive more 
than $100,000 in any fiscal year pursuant to this part, no part of 
which may be used to pay for indirect costs or charges. 
"(d) DEFINITION.—For the purpose of this part, the term 'accred-
ited law school' means any law school which is accredited by a 
nationally recognized accrediting agency or association approved by 
the Secretary for this purpose, including any combination or consor-
tium of such schools. 
a 
APPUCATIONS 
"SEC. 962. (a) REQUIREMENTS.—A grant or contract authorized by 
this part may be made by the Secretary upon application which— 
"(1) is made at such time or times and contains such informa-
tion as the Secretary may prescribe; 
"(2) provides for such fiscal control and fund accounting 
procedures as may be necessary to aissure proper disbursement 
of and accounting for Federal funds paid to the applicant under 
this part; and 
"(3) provides for making such reports, in such form and 
., 
containing such information as the Secretary may require to 
* 
carry out functions under this part, and for keeping such 
records and for affording such access thereto as the Secretary 
may find necessary to assure the correctness and verification of 
such reports. 
Grants. 
Contracts. 
20 u s e 1134t. 
Reports. 
100 STAT. 1560 
PUBLIC LAW 99-498—OCT. 17, 1986 
20 use 1134u. 
20 use 11341 
note. 
"(b) 
DISTRIBUTION OF GRANTS AND CONTRACTS.—The Secretary 
shall allocate grants or contracts under this part in such manner as 
will provide an equitable distribution of such grants or contracts 
throughout the United States among law schools which show prom-
ise of being able to use funds effectively for the purposes of this part. 
"PART G—AUTHORIZATION OF APPROPRIATIONS 
"AMOUNT AND DURATION OF AUTHORIZATION 
"SEC. 971. (a) PART A.—There are authorized to be appropriated to 
carry out part A of this title $10,000,000 for fiscal year 1987, and 
such sums as may be necessary for the 4 succeeding fiscal years, 
"(b) PART B.—There are authorized to be appropriated to carry out 
part B of this title $30,000,000 for fiscal year 1987, and such sums as 
may be necessary for the 4 succeeding fiscal years. 
"(c) PART C.—There are authorized to be appropriated to carry out 
part C of this title $10,000,000 for fiscal year 1987, and such sums as 
may be necessary for the 4 succeeding fiscal years. 
"(d) PART D.—There are authorized to be appropriated to carry 
out part D of this title $30,000,000 for fiscal year 1987, and such 
sums as may be necessary for the 4 succeeding fiscal years. 
"(e) PART E.—There are authorized to be appropriated to carry out 
part E of this title $5,000,000 for fiscal year 1987, and such sums as 
may be necessary for the 4 succeeding fiscal years. 
' (f) PART F.—There are authorized to be appropriated to carry out 
part F of this title $5,000,000 for fiscal year 1987, and such sums as 
may be necessary for the 4 succeeding fiscal years. 
'Xg) LIMITATION ON APPROPRIATIONS FOR PARTS A AND D.—No 
funds are authorized to be appropriated for part A or D of this title 
for any fiscal year unless the appropriation for the preceding fiscal 
year— 
"(1) for part B equals or exceeds $18,000,000; and 
"(2) for part C equals or exceeds $5,000,000.". 
(b) EFFECTIVE DATE.—The amendments made to section 932 (a) 
and (c) of the Act by this section shall take effect with respect to 
individuals appointed to the Fellowship Board to fill vacancies 
occurring after the date of enactment of this Act on the Fellowship 
Board as constituted prior to the amendments made by this section. 
The Secretary shall make initial appointments under this subsec-
tion so that the terms of 3 members expire at the end of 2 years, 3 
members expire at the end of 3 years, and 3 members expire at the 
end of 4 years. 
TITLE X—IMPROVEMENT OF POSTSECONDARY EDUCATION 
SEC. 1001. FUND FOR THE IMPROVEMENT OF POSTSECONDARY EDU-
CATION. 
20 use ii35a-i. 
(a) FUNCTIONS.—(1) Section 1003(c)(2) of the Act is amended to 
read as follows: 
"(2) advise the Secretary and the Director of the Fund for the 
e 
nm Improvement of Postsecondary Education on priorities for the 
* improvement of postsecondary education and make such rec-
ommendations as it may deem appropriate for the improvement 
of postsecondary education and for the evaluation, dissemina-
tion, and adaptation of demonstrated improvements in post-
secondary educational practice;". 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1561 
(b) REAUTHORIZATION.—Section 1005 of the Act is amended to read 
as follows: 
"AUTHORIZATION OF APPROPRIATIONS 
"SEC. 1005. There are authorized to be appropriated to carry out 
20 USC ll35a-3. 
this part $14,500,000 for fiscal year 1987, and such sums as may be 
necessary for the 4 succeeding fiscal years.". 
SEC. 1002. MINORITY SCIENCE AND ENGINEERING IMPROVEMENT PRO-
GRAMS. 
Part B of title X of the Act is amended to read £is follows: 
"PART B—MINORITY SCIENCE AND ENGINEERING IMPROVEMENT 
PROGRAMS 
, "SUBPART 1—MINORITY SCIENCE IMPROVEMENT PROGRAM 
PURPOSE; AUTHORITY 
"SEC. 1021. (a) It is the purpose of this subpart to continue the 
authority of the Department to operate the Minority Institutions 
Science Improvement Program created under section 3(a)(1) of the 
National Science Foundation Act of 1950 and transferred to the 
Department by section 304(aXl) of the Department of Education 
Organization Act of 1979. 
"OD) The Secretary shall, in accordance with the provisions of this 
subpart, carry out a program of making grants to institutions of 
higher education that are designed to effect long-range improve-
ment in science and engineering education at predominantly minor-
ity 
institutions 
and to 
increase 
the 
participation 
of 
underrepresented ethnic minorities in scientific and technological 
careers. 
"GRANT RECIPIENT SELECTION 
"SEC. 1022. (a) ESTABUSHMENT OF CRITERIA.—Grants under this 
subpart shall be awarded on the basis of criteria established by the 
Secretary by regulations. 
"(b) PRIORITIES TO BE GIVEN IN CRITERIA.—In establishing criteria 
under subsection (a), the Secretary shall give priority to applicants 
which have not previously received funding from the Minority 
Institutions Science Improvement Program and to previous grantees 
with a proven record of success, as well as to applications that 
contribute to achieving balance among projects with respect to 
geographic region, academic discipline, and project type. 
"(c) REQUIRED CRITERIA.—In establishing criteria under subsection 
(a), the Secretary may consider the following selection criteria in 
making grants: 
"(1) plan of operation; 
"(2) quality of key personnel; 
"(3) budget and cost effectiveness; 
^ 
"(4) evaluation plan; 
"(5) adequacy of resources; 
"(6) identification of need for the project; 
J 
"(7) potential institutional impact of the project; 
"(8) institutional commitment to the project; 
'^ 
"(9) expected outcomes; and 
20 USC 1135b. 
42 USC 1862. 
20 USC 3444. 
20 USC 1135b-l. 
100 STAT. 1562 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(10) scientific and educational value of the proposed project. 
"USE OF FUNDS 
20 use il35b-2. 
"SEC. 1023. (a) TYPES OF GRANTS.—Funds appropriated to carry 
out this subpart may be made available as— 
"(1) institutional grants (as defined in section 1046(6)); 
"(2) cooperative grants (as defined in section 1046(7)); 
.^ 
"(3) design projects (as defined in section 1046(8)); or 
'* 
"(4) special projects (as defined in section 1046(9)). 
"(b) AUTHORIZED USES FOR EACH TYPE OF GRANT.—(1) The au-
thorized uses of funds made available as institutional grants include 
(but are not limited to)— 
"(A) faculty development programs; or 
"(B) development of curriculum materials. 
"(2) The authorized uses of funds made available as cooperative 
grants include (but are not limited to)— 
"(A) assisting institutions in sharing facilities and personnel; 
,. 
"(B) disseminating information about established programs in 
f 
science and engineering; 
"(C) supporting cooperative efforts to strengthen the institu-
• 1 ' ; 
H
^ tions'science and engineering programs; or 
"(D) carrying out a combination of any of the activities in 
. i ^ 'W^: 
subparagraphs (A) through (C). 
"(3) The authorized uses of funds made available as design 
projects include (but are not limited to)— 
"(A) developing planning, management, and evaluation sys-
»
5 tems; or 
"(B) developing plans for initiating scientific research and for 
improving institutions' capabilities for such activities. 
Funds used for design project grants may not be used to pay more 
than 50 percent of the salaries during any academic year of faculty 
members involved in the project. 
1-1. i VI ,
* 
"(4) rpj^g authorized uses of funds made available as special 
projects include (but are not limited to)— 
"(A) advanced science seminars; 
"(B) science faculty workshops and conferences; 
" 
"(C) faculty training to develop specific science research or 
' education skills; 
; 
"(D) research in science education; 
" 
"(E) programs for visiting scientists; 
"(F) preparation of films or audio-visual materials in science; 
f,, 
"(G) development of learning experiences in science beyond 
,; those normally available to minority undergraduate students; 
"(H) development of pre-college enrichment activities in sci-
ence; or 
"(I) any other activities designed to address specific barriers 
to the entry of minorities into science. 
"ADMINISTRATION 
,: 
20 use ii35b-3. 
"SEC. 1024. The Secretary shall submit to the Congress on an 
annual basis a list of grantees receiving awards under this part. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1563 
"SUBPART 2—SCIENCE AND ENGINEERING ACCESS PROGRAMS 
"MINORITY SUPPORT IN SCIENCE AND ENGINEERING PROGRAMS 
"SEC. 1031. The Secretary shall, in accordance with the provisions 
20 USC il35c. 
of this subpart, carry out a program of making grants to institutions 
of higher education that are designed to provide or improve support 
programs for minority students enrolled in science and engineering 
programs at institutions with a significant minority enrollment (at 
least 10 percent). 
"SPECIAL SERVICE PROJECTS PROGRAM 
"SEC. 1032. The Secretary shall, in accordance with the provisions 
20 use ii35c-i. 
of this subpart, carry out a program of making grants to institutions 
of higher education that are designed to provide or improve support 
to accredited colleges and universities and professional scientific 
societies for a broad range of activities designed to eliminate or 
reduce specific barriers to the entry of minorities into science and 
technology. 
f 
"SUPPORTABLE ACTIVITIES 
"SEC. 1033. Funds appropriated for the purpose of this subpart 
20 use il35c-2. 
may be made available for— 
"(1) providing needed services to groups of minority institu-
tions or providing training for scientists and engineers from 
I 
eligible minority institutions; 
"(2) providing needed services to groups of institutions serving 
significant numbers of minority students or providing training 
for scientists and engineers from such institutions to improve 
their ability to train minority students in science or engineer-
ing; 
"(3) assisting minority institutions to improve the quality of 
, 
preparation of their students for graduate work or careers in 
] 
science, mathematics, and technology; 
"(4) improving access of undergraduate students at minority 
institutions to careers in the sciences, mathematics, and 
engineering; 
"(5) improving access of minority students to careers in the 
sciences, mathematics, and engineering; 
^ 
"(6) improving access for pre-coUege minority students to 
careers in science, mathematics, and engineering through 
community outreach programs conducted through colleges and 
universities eligible for support through the Minority Science 
and Engineering Improvement Programs; 
"(7) disseminating activities, information, and educational 
materials designed to address specific barriers to the entry of 
. 
., 
minorities into science and technology, and conducting activi- 
' ' 
ties and studies concerning the flow of underrepresented ethnic 
minorities into scientific careers; 
"(8) supporting curriculum models to encourage minority stu-
dent participation in research careers in science, mathematics, 
;. 
and technology; and 
"(9) improving the capability of minority institutions for self- 
• 
assessment, management, and evaluation of their science, 
^ 
mathematics, and engineering programs and dissemination of 
their results. 
100 STAT. 1564 
PUBLIC LAW 99-498—OCT. 17, 1986 
'SUBPART 3—ADMINISTRATIVE AND GENERAL PROVISIONS 
20 u s e 1135d. 
20 u s e 1135d-l. 
State and local 
governments. 
20 u s e 1135d-2. 
' 
" 
ELIGIBILITY FOR GRANTS 
"SEC. 1041. Eligibility to receive grants under this part is limited 
to— 
"(1) public and private nonprofit institutions that are minor-
ity institutions (as defined in section 1046(3)); 
"(2) nonprofit science-oriented organizations, professional sci-
entific societies, and all nonprofit, accredited colleges and 
universities which provide a needed service to a group of eligible 
minority institutions or which provide in-service training for 
project directors, scientists, and engineers from eligible minor-
ity institutions; and 
"(3) for the purposes of section 1032, public and private 
nonprofit institutions that have at least 10 percent minority 
enrollment. 
GRANT APPLICATION 
"SEC. 1042. (a) SUBMISSION AND CONTENTS OF APPLICATIONS.—An 
eligible applicant (as determined under section 1041) that desires to 
receive a grant under this part shall submit to the Secretary an 
application therefor at such time or times, in such manner, and 
containing such information as the Secretary may prescribe by 
regulation. Such application shall set forth— 
"(1) a program of activities for carrying out one or more of the 
purposes described in section 1021(b) in such detail as will 
enable the Secretary to determine the degree to which such 
program will accomplish such purpose or purposes; and 
"(2) such other policies, procedures, and assurances as the 
Secretary may require by regulation. 
"(b) APPROVAL BASED ON LIKELIHOOD OF PROGRESS.—The Secretary 
shall approve an application only if the Secretary determines that 
the application sets forth a program of activities which are likely to 
make substantial progress toward achieving the purposes of this 
part. 
"CROSS PROGRAM AND CROSS AGENCY COOPERATION 
"SEC. 1043. The Minority Science and Engineering Improvement 
Programs shall cooperate with other programs within the Depart-
ment and within Federal, State, and private agencies which carry 
out programs to improve the quality of science, mathematics, and 
engineering education. 
20 u s e 1135d-3. 
5 u s e 5101 et 
seq. 
5 u s e 5331 et 
seq. 
eontracts. 
ADMINISTRATIVE PROVISIONS 
"SEC. 1044. (a) TECHNICAL STAFF.—The Secretary shall appoint, 
without regard to the provisions of title 5 of the United States Code 
governing appointments in the competitive service, not less than 2 
technical employees with appropriate scientific and educational 
background to administer the programs under this part who may be 
paid without regard to the provisions of chapter 51 and subchapter 
III of chapter 53 of such title relating to classification and General 
Schedule pay rates. 
"(b) PROCEDURES FOR GRANT REVIEW.—The Secretary shall estab-
lish procedures for reviewing and evaluating grants and contracts 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1565 
made or entered into under such programs. Procedures for review-
ing grant applications, based on the peer review system, or contracts 
- 
<. 
v 
;; 
for financial assistance under this title may not be subject to any 
review outside of officials responsible for the administration of the 
Minority Science and Engineering Improvement Programs. 
"ADVISORY PROVISIONS 
"SEC. 1045. (a) ADVISORY BOARD FOR THE MINORITY SCIENCE AND 
20 use ii35d-4. 
ENGINEERING IMPROVEMENT PROGRAMS.—There shall be established 
an Advisory Board for the Minority Science and Engineering 
Improvement Programs. The Board shall consist of 9 members, at 
least 6 of whom must be racial and national origin minority sci-
entists, engineers, or science or engineering educators. In constitut-
ing the initial Board under subsection (c), efforts shall be made to 
achieve a balance on the Board with respect to sexual, geographic, 
and institutional background. 
"(b) PURPOSES OF THE BOARD.—The Board shall act as an advisory 
group to the program. Drawing on the expertise of members, the 
Board will recommend to the Secretary and the director of the 
program those policies, procedures, and other measures which will 
further the efforts made through the program to improve the qual-
ity of science and engineering education by contributing to the 
access and retention of ethnic minorities in science and engineering 
education progrguns. Upon the request of the Secretary, the Board 
may be called upon to advise the Secretary on any matters within 
the Department which could be expected to have an impact on the 
access of minority students to careers in science, mathematics, or 
engineering. 
"(c) CONSTITUTION OF BOARD.—The initial Board shall be con-
stituted as follows: 
"(1) The Director of the Programs shall solicit nominations for 
the Board from present and past grant recipients of the Minor-
ity Institutions Science Improvement Program. The Director 
shall select from among the nominees 18 candidates whose 
names shall be given to the Secretary. 
"(2) The Secretary shall choose 9 Board members from among 
the 18 presented. 
"(3) The Secretary shall assign 3 Board members to a 3-year 
term, 3 members to a 4-year term, and 3 members to a 5-year 
<^ term. Upon expiration of these initial terms, replacement Board 
members shall serve for 3-year terms. Board members may 
serve more than one term. 
f 
"(4) The Chair of the Board shall be selected by a simple 
majority vote of Board members and will serve a single term. 
i 
(5) Vacancies on the Board shall be filled by the Board 
soliciting nominees from institutions eligible to receive grants 
through the Program. From among the nominees the present 
and immediate past Chair of the Board shall submit at least 2 
nominees for each vacancy to the Secretary, who shall fill 
vacancies from among the names submitted. 
"(d) COMPENSATION OF THE BOARD.—Members of the Board shall 
receive compensation at a rate not to exceed the daily equivalent of 
the maximum annual rate of basic pay in effect for grade GS-15 of 
the General Schedule for each day (including traveitime) during 
5 USC 5332. 
which they are engaged in the actual performance of duties vested 
in the Board. 
100 STAT. 1566 
PUBLIC LAW 99-498—OCT. 17, 1986 
"DEFINITIONS 
20 use ll35d-5. 
"SEC. 1046. For the purpose of this part— 
^r 
"(1) The term 'accredited' means currently certified by a 
nationally recognized accrediting agency or making satisfactory 
progress toward achieving accreditation. 
"(2) The term 'minority' means American Indian, Alaskan 
Native, Black (not of Hispanic origin), Hispanic (including per-
8i 
sons of Mexican, Puerto Rican, Cuban, and Central or South 
American origin), Pacific Islander or other ethnic group 
underrepresented in science and engineering. 
"(3) The term 'minority institution' means an institution of 
higher education whose enrollment of a single minority or a 
combination of minorities (as defined in paragraph (2)) exceeds 
50 percent of the total enrollment. The Secretary shall verify 
this information from the data on enrollments in the higher 
education general information surveys (HEGIS) furnished by 
the institution to the Office for Civil Rights, Department of 
Education. 
"(4) The term 'science' means, for the purpose of this pro-
gram, the biological, engineering, mathematical, physical, and 
social sciences, and history and philosophy of science; also 
included are interdisciplinary fields which are comprised of 
overlapping areas among two or more sciences. 
"(5) The term 'underrepresented in science and engineering' 
means a minority group whose number of scientists and engi-
neers per 10,000 population of that group is substantially below 
the comparable figure for scientists and engineers who are 
white and not of Hispanic origin. 
"(6) The term 'institutional grant' means a grant that sup-
ports the implementation of a comprehensive science improve-
ment plan, which may include any combination of activities for 
improving the preparation of minority students for careers in 
science. 
"(7) The term 'cooperative grant' means a grant that assists 
groups of nonprofit accredited colleges and universities to work 
together to conduct a science improvement program. 
"(8) The term 'design projects' means projects that assist 
minority institutions that do not have their own appropriate 
resources or personnel to plan and develop long-range science 
improvement programs. 
"(9) The term 'special projects' means— 
"(A) a special project grant to a minority institution 
' 
which support activities that— 
"(i) improve the quality of training in science and 
engineering at minority institutions; or 
* 
"(ii) enhance the minority institutions' general sci-
, , 
entific research capabilities; or 
"(B) a special project grant to any eligible applicant 
which supports activities that— 
"(i) provide a needed service to a group of eligible 
;. 
minority institutions; or 
"(ii) provide in-service training for project directors, 
scientists, and engineers from eligible minority institu-
tions. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1567 
AUTHORIZATION OF APPROPRIATIONS 
"SEC. 1047. (a) AUTHORIZATIONS.—There are authorized to be 
appropriated to carry out the purposes of this part, $7,500,000 for 
fiscal year 1987, and such sums as may be necessary for the 4 
succeeding fiscal years. 
"(b) APPROPRIATION LIMITATION.—For any fiscal year, 50 percent 
of the funds under this part shall be allocated for the purpose of 
section 1021, 33.33 percent for the purpose of section 1031, and 16.67 
percent for the purpose of section 1032.". 
SEC. 1003. INNOVATIVE PROJECTS AUTHORIZED. 
Title X of the Act is further amended by adding at the end thereof 
the following new part: 
"PART C—INNOVATIVE PROJECTS FOR COMMUNITY SERVICES AND 
STUDENT FINANCIAL INDEPENDENCE 
20 u s e 1135d-6. 
STATEMENT OF PURPOSE 
"SEC. 1061. It is the purpose of this part to support innovative 
projects in order to determine the feasibility of encouraging student 
participation in community service projects in exchange for edu-
cational services or financial assistance and thereby reduce the debt 
acquired by students in the course of completing postsecondary 
educational programs. 
20 u s e 1135e. 
INNOVATIVE PROJECTS FOR COMMUNITY SERVICES AND STUDENT 
FINANCIAL INDEPENDENCE 
"SEC. 1062. (a) GENERAL AUTHORITY.—The Secretary is authorized, 
in accordance with the provisions of this part, to make grants to and 
contracts with institutions of higher education (including combina-
tions of such institutions) and with such other public agencies and 
nonprofit private organizations as the Secretary deems necessary for 
innovative projects designed to carry out the purpose of this part. 
"(b) APPLICATIONS.—No grant may be made and no contract may 
be entered into under this section unless an application is made at 
such time, in such manner, and contained or accompanied by such 
information as the Director may require. 
"(c) APPLICABLE PROCEDURES.—(1) No application may be approved 
under subsection (b) unless the National Board of the Fund for 
Improvement of Postsecondary Education, under procedures estab-
lished by the Director, approves the application. 
"(2) The provisions of section 1004(b) shall apply to grants made 
under this part. 
Grants. 
Contracts. 
20 u s e 1135e-l. 
AUTHORIZATION OF APPROPRIATIONS 
"SEC. 1063. (a) There are authorized to be appropriated to carry 20 use ii35e-2. 
out this part, $3,000,000 for fiscal year 1987, and such sums as may 
be necessary for the 4 succeeding fiscal years. 
"(b) No funds may be appropriated pursuant to subsection (a) for 
any fiscal year unless funds are appropriated for part A of this title 
for such fiscal year.". 
100 STAT. 1568 
PUBLIC LAW 99-498—OCT. 17, 1986 
SEC. 1004. TECHNICAL AMENDMENT. 
The headings of title X, and of part A of title X, of the Act are 
' 
amended to read as follows: 
"TITLE X—POSTSECONDARY IMPROVEMENT PROGRAMS 
ihi^ 
"PART A—FUND FOR THE IMPROVEMENT OF POSTSECONDARY 
EDUCATION". 
TITLE XI—PARTNERSHIPS FOR ECONOMIC DEVELOPMENT 
AND URBAN COMMUNITY SERVICE 
SEC. 1101. PROGRAM AUTHORIZED. 
Title XI of the Act is amended to read as follows: 
"TITLE XI—PARTNERSHIPS FOR ECONOMIC DEVELOP 
MENT AND URBAN COMMUNITY SERVICE 
"PART A—PARTNERSHIPS FOR ECONOMIC DEVELOPMENT 
"FINDINGS AND PURPOSE 
State and local 
"SEC. 1101. (a) FINDINGS.—The Congress finds that— 
io^uscTis^ 
^^'^ 
"^^^ there is a need for more systematic and comprehensive 
efforts to link postsecondary education institutions with State 
and local governments, labor, business, industry, and commu-
nity organizations, in order to meet local problems, and to plan, 
maintain, and attract lasting economic improvement; 
"(2) effective economic development is enhanced by the active 
•''^'" participation of postsecondary education institutions; 
-^ 
"(3) the economic vitality and international competitiveness 
" of the United States depends on using all available resources; 
' 
and 
> 
"(4) Federal leadership is critical to promoting such competi-
tiveness efforts. 
"O?) PURPOSE.—The purpose of this part is to encourage the 
involvement of postsecondary education institutions with units of 
government, labor, business, industry, and community organizations 
to— 
"(1) conduct planning, research, and activities which promote 
economic development and the expansion and retention of jobs 
V on the local, State, and regional level; 
"(2) develop programs for job retraining and expanding busi-
ahB ness and industry opportunities in the area; 
"(3) enhance local growth initiatives through utilization of 
their expertise in economic and community development; and 
"(4) demonstrate new approaches to economic development 
partnerships £md to make them available to other areas of the 
^ 
^ Nation. 
"USE OF ECONOMIC DEVELOPMENT FUNDS 
20 use 1136a. 
"SEC. 1102. (a) ALLOWABLE ACTIVITIES.—An eligible institution or 
consortium of such institutions may apply for assistance under this 
part to support— 
i> 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1569 
"(1) planning and research (including applied research) di-
rected at solving local economic development problems, promot-
ing growth, and improving productivity; 
"(2) resource exchanges between faculty, government person-
nel, and private sector experts in economic development activi-
ties; and 
; 
"(3) any combination of the activities described in subpara-
graphs (A) and (B) which promote local economic development. 
"(b) SPECIAL PROJECTS AUTHORIZED.—Special projects which may 
be supported under subsection (aX2) are projects which address 
broad or national economic development issues, are innovative in 
their approach, and hold promise of application beyond the area 
served. Such projects may include— 
"(1) the application of technology research to manufacturing 
aspects of mature industries in a region or State; 
"(2) the design and development of technical assistance cen-
ters based at eligible institutions which will provide an 
integrated program of education, research, and technology 
transfer to business and industry; 
"(3) projects to support entrepreneurship training and tech-
nical assistance; and 
"(4) projects to develop new approaches or complement efforts 
to explore, expand, and foster opportunities for international 
business and trade. 
"(c) DISSEMINATION PROJECTS.—In addition to the activities de- Grants. 
scribed in subsections (a) and (b), the Secretary is authorized to 
make a limited number of grants to identify and disseminate effec-
tive models and techniques which use partnerships between post-
secondary education institutions and others involved in economic 
development to support economic improvement. 
"(d) MAXIMUM GRANT.—The maximum grant awarded under 
subsection (a) for any fiscal year shall be $50,000, except that the 
limitation contained in this paragraph shall not apply in the case of 
an application submitted by a consortium of eligible institutions. 
REQUIREMENTS FOR ECONOMIC DEVELOPMENT GRANT APPUCATIONS 
"SEC. 1103. (a) LOCAL INVOLVEMENT.—The Secretary may make 
grants under this part to an eligible institution or consortium of 
such institutions that demonstrates in its application a proposed 
program that will involve the active participation of and commit-
ment of resources and personnel by— 
"(1) local or State units of governments; 
^ 
"(2) business or industry; 
"(3) labor unions or union representatives; and 
"(4) nonprofit organizations concerned with economic develop-
ment in the area to be served. 
"(b) GENERAL CONDITIONS.—Each application under this part shall 
be filed with the Secretary at such time or times as the Secretary 
may prescribe. The application shall— 
"(1) set forth a program which is likely to make substantial 
progress toward achieving the purposes of this part; 
"(2) provide for an effective dissemination of information on 
successful results of the activities; 
"(3) provide assurances that an assessment has been made of 
Federal and State resources and that the resources are unavail-
able for the proposed activity; 
State and local 
governments. 
20 use 1136b. 
100 STAT. 1570 
PUBLIC LAW 99-498—OCT. 17, 1986 
"(4) describe the consultation and, if appropriate, coordination 
with other Federal and State economic development efforts; 
"(5) contain assurances that the eligible institution will, to the 
extent practicable, coordinate its use of resources available for 
student assistance in a manner which will support the activities 
conducted under this part; 
; 
"(6) describe how the plan fits into the overall economic 
development plan for the area to be served, contributes to long-
term economic growth and employment opportunities, and fur-
thers the goals of the postsecondary education institution; and 
"(7) contain such other information and assurances as the 
Secretary may require by regulation. 
"(c) SPECIAL CONSIDERATION.—In making grants under this part, 
the Secretary shall give special consideration to applications 
which— 
"(1) propose to serve an area which— 
"(A) has an unemployment rate 1 percent above the 
national average unemployment rate for the most recent 
24-month period, or 
"(B) has experienced or is about to experience sudden 
economic dislocation resulting in job loss that is significant, 
' 
both in terms of the number of jobs eliminated and the 
"•' 
effect upon the employment rate of the area; 
"(2) are submitted by a consortia of postsecondary education 
! 
institutions, including 4- and 2-year, public and private post-
secondary education institutions, and provides a regional geo-
graphic approach to solving economic development problems; or 
"(3) develop approaches which promote economic diversifica-
tion for rural areas or areas whose economy is dependent upon 
a single industry or single employer. 
"PART B—URBAN COMMUNITY SERVICE 
. 
"PURPOSE 
20 use 1137. 
"SEC. n i l . It is the purpose of this part to encourage the use of 
urban universities as sources of skills, talents, and knowledge which 
can serve the urban areas in which they are located in meeting 
urban problems. 
} 
•-,..' 
" U S E OF URBAN COMMUNITY SERVICE F U N D S 
U 
-: 
20 use 1137a. 
"SEC. 1112. (a) ALLOWABLE ACTIVITIES.—An eligible institution 
that is an urban university, or consortium of such institutions, may 
apply for assistance under this part to support cooperative projects 
through which such universities provide urban areas with applied 
research, planning services, specialized training, technical assist-
ance or other services to address high priority needs of such urban 
areas. 
"(b) PRIORITY NEEDS.—Each eligible urban university shall estab-
lish high priority needs through consultation with local government, 
business, labor, or community-based organizations. 
20 use 1137b. 
CONTENTS FOR APPLICATIONS FOR URBAN COMMUNITY SERVICES 
PROJECTS 
"SEC. 
1113. (a) EVALUATION AND SELECTION OF APPLICATIONS.—An 
application submitted under this part shall— 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1571 
l
> 
"(1) contain assurances that the chief executive officer of the 
local government has been given a reasonable opportunity to 
review and comment on the proposed project or projects; and 
"(2) show participation of any local agency of general govern-
ment and of the community in the development and im-
plementation of each project for which assistance is sought. 
"(b) SELECTION PRIORITIES.—The Secretary shall give priority to 
applications which contain cooperative arrangements among urban 
universities, community colleges, and other institutions of higher 
education and other entities in the public, private, and nonprofit 
sectors within an urban area. 
. 
^ 
"PART C—GENERAL PROVISIONS 
"ADMINISTRATIVE PROVISIONS 
"SEC. 1121. (a) PEER REVIEW.—The Secretary shall designate a 20 use 1138. 
peer review panel to review applications submitted under parts A 
and B of this title and make recommendations for funding to the 
Secretary. In selecting the peer review panel, the Secretary shall 
consult with other appropriate Cabinet-level officials and non-Fed-
eral organizations, to ensure that the panel will be geographically 
balanced and be composed of an equal number of representatives 
from public and private higher education, labor, business, and State 
and local government who have expertise in economic development 
and urban community service. 
"(b) DURATION OF GRANTS.—Subject to the availability of appro-
priations, grants under parts A and B may be made on a multiyear 
basis, except that no institution, individually or as a participant in a 
combination of such institutions may receive a grant for one project 
for more than 5 years. 
"(c) GEOGRAPHIC DISTRIBUTION.—The Secretary shall award grants 
under parts A and B in such a manner as to achieve broad and 
equitable distribution of assistance throughout the Nation. 
"(d) NON-FEDERAL MATCH REQUIRED.—An applicant under parts A 
and B and the organizations associated with its application shall 
contribute to the conduct of the program supported by the grant an 
amount from non-Federal sources equal to at least one-fourth the 
amount of the grant, which contribution may be in cash or in 
services, supplies, or equipment. 
"(e) WAIVER OF MATCHING REQUIREMENT.—The Secretary 
may 
waive the requirement of subsection (d) with respect to an eligible 
institution that demonstrates a unique hardship that precludes its 
compliance with that requirement. 
"AUTHORIZATION OF APPROPRIATIONS 
"SEC. 1122. There are authorized to be appropriated to carry out 20 USC ii38a. 
parts A and B of this title $15,000,000 for fiscal year 1987 and such 
sums as may be necessary for each of the 4 succeeding fiscal years. 
The Secretary shall allocate 66% percent of the funds appropriated 
under this title for part A and 33% percent for part B. 
DEFINITIONS 
"SEC. 1123. As used in this title— 
"(1) the term 'eligible institution' has the meaning given such 
term by section 435(a) of this Act; 
20 USC 1138b. 
100 STAT. 1572 
PUBLIC LAW 99-498—OCT. 17, 1986 
''• 
"(2) the term 'urban area' means a metropolitan statistical 
area having a population of not less than 500,000 individuals; or 
in any State which does not have a standard metropolitan 
statistical area which has such a population, the entity of the 
State having an agreement under section 1203 may, or if no 
such entity has an agreement, the Secretary shall designate one 
urban area for the purpose of this part; and 
"(3) the term 'urban university' means an institution of 
higher education or a consortium of institutions of higher edu-
; * ^ cation, any one of which meets all the requirements of this 
paragraph which— 
"(A) is located in an urban area, 
"(B) draws a substantial portion of its undergraduate 
students from the urban area in which it is located or 
contiguous students from the urban area in which it is 
located or contiguous areas, 
^ 
''. 
"(C) carries out programs to make postsecondary edu-
* 
cation opportunities more accessible to residents of such 
urban area or contiguous areas, 
"(D) has the present capacity to provide resources respon-
sive to the needs and priorities of such urban area and 
contiguous areas, 
"(E) offers a range of professional or graduate programs 
sufficient to sustain its capacity to provide such resources, 
and 
"(F) has demonstrated and sustained a sense of respon-
sibility to such urban area and contiguous areas and its 
people. 
"PART D—WAGNER INSTITUTE OF URBAN PUBUC POUCY 
"PURPOSE; DESIGNATION 
New York. 
"SEC. 1131. It is the purpose of this part to provide assistance to 
20 use 1139. 
the City University of New York to enable the University to estab-
lish a center to coordinate resources for the development of solu-
tions to pressing urban and social problems. The institute shall be 
known as the 'Robert F. Wagner, Sr., Institute of Urban Public 
Policy' (hereafter in this part referred to as the 'Institute'). 
^ ' 
' 
"APPUCATION FOR AND USE OF FUNDS 
20 use 1139a. 
"SEC. 1132. (a) AppucATiON.—No pa3nnent may be made under 
this part except upon application at such time, in such manner, and 
containing or accompanied by such information as the Secretary 
may require. 
"Ot)) USE OF FUNDS.—Payments made under this part may be used 
by the City University of New York to establish and operate the 
Institute and to support the following activities of the Institute: 
"(1) The Institute shall inventory and assess academic re-
search, education, and training capabilities with respect to 
urban redevelopment strategies. The Institute shall ensure that 
information derived from this activity shall be available for use 
in public policy debates on solutions to urban problems. 
"(2) The Institute shall conduct a series of forums to promote 
/ ' ^ and coordinate decisionmaking on urban problems. Such forums 
shall be focused upon such issues as economic development. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1573 
youth employment, law enforcement, education, services to the 
elderly, health care delivery systems, and immigration patterns. 
Participants in such forums shall be drawn from Federal, State, 
and local government, the business and professional commu-
nity, labor, education, and community based organizations. 
"(3) In developing topics for the forums to be conducted under 
paragraph (2), and in establishing priorities for the allocation of 
its resources, the Institute shall establish and regularly consult 
with an advisory council of urban advisors representing leaders 
in government, business, labor, education, and community 
based operations. 
"(4) The Institute shall prepare and publish reports on the 
forums conducted pursuant to paragraph (2) and publish and 
disseminate the results of its research activities. 
"AUTHORIZATION OF APPROPRIATIONS 
"SEC. 1133. There are authorized to be appropriated to carry out 
20 USC 1139b. 
this part, $2,000,000, which may remain available until expended.". 
TITLE XII-GENERAL PROVISIONS 
SEC. 1201. TREATMENT OF TERRITORIES AND TERRITORIAL STUDENT 
ASSISTANCE. 
Section 1204 of the Act is amended— 
20 use il44a. 
(1) by striking out the first sentence of subsection (a) and 
inserting in lieu thereof the following: "Within 6 months after 
the date of enactment of the Higher Education Amendments of 
1986, the Secretary shall promulgate regulations in accordance 
with the recommendations in the report entitled 'Postsecondary 
Education in the U.S. Territories' (May 1982) in order to adapt 
programs under this Act to the needs of Guam, the Virgin 
Islands, American Samoa, the Trust Territory of the Pacific 
Islands, and the Northern Mariana Islands."; 
(2) by striking out "October 1, 1985" in subsection (c) and 
inserting in lieu thereof "October 1,1991,"; and 
(3) by striking out subsection (b), by redesignating subsection 
(a) as subsection QD), and by inserting before such subsection the 
following new subsection: 
"(a) The Secretary is required to waive the eligibility criteria of 
any postsecondary education program administered by the Depart-
ment where such criteria does not take into account the unique 
circumstances in Guam, the Virgin Islands, American Samoa, the 
Trust Territories of the Pacific Islands, and the Northern Mariana 
Islands. Priority shall be given to proposals submitted by these 
territories which otherwise meet program criteria.". 
SEC. 1202. REAUTHORIZATION OF THE NATIONAL ADVISORY COMMITTEE 
ON ACCREDITATION AND INSTITUTIONAL ELIGIBILITY. 
Section 1205(f) of the Act is amended by striking out "September 
20 use 1145. 
30,1985" and inserting in lieu thereof "September 30,1991". 
SEC. 1203. COMMISSION TO STUDY POSTSECONDARY INSTITUTIONAL AND 
PROGRAMMATIC RECOGNITION PROCESS. 
Title XII of the Act is amended by adding at the end thereof the 
following new section: 
100 STAT. 1574 
PUBLIC LAW 99-498—OCT. 17, 1986 
"COMMISSION TO STUDY POSTSECONDARY INSTITUTIONAL AND 
PROGRAMMATIC RECOGNITION PROCESS 
20 use 1145a. 
"SEC. 1206. (a) There is established in the legislative branch a 
Joint Study Commission on Postsecondary Institutional Recognition 
(hereafter in this section referred to as the 'Commission'). 
"(b) The Commission shall be composed of 5 members appointed 
jointly by the President pro tempore of the Senate, upon the rec-
ommendation of the Majority Leader and the Minority Leader, and 
by the Speaker of the House of Representatives, upon the rec-
ommendation of the Majority Leader and the Minority Leader. 
"(c)(1) Members of the Commission shall be appointed, on the basis 
of their integrity, impartiality, and good judgment, from among 
individuals who, as a result of their training, experience, and attain-
ment, are widely recognized by professionals in the fields of edu-
cation and governmental administration as experts in those fields. 
"(2) A majority of the members of the Commission may not, at the 
* 
time of their appointment, be serving as either employees or officers 
of any accrediting agency or an organization of accrediting agencies, 
currently serving as administrators of accredited institutions, or be 
current or past members of the Advisory Committee on Accredita-
tion and Institutional Eligibility of the Department. 
"(3) Vacancies in the membership of the Commission shall not 
affect the power of the remaining members to perform the duties of 
r 
the Commission and shall be filled in the same manner in which the 
original appointment was made. 
"(4) Each member of the Commission not otherwise employed by 
the United States Government shall receive the daily equivalent of 
the annual basic pay for level V of the Executive Schedule under 
section 5316 of title 5, United States Code, for each day during which 
such member is actually engaged in the performance of the duties of 
the Commission. Each member of the Commission shall be allowed 
travel expenses in the same manner as any individual employed 
intermittently by the Federal Government is allowed travel ex-
penses under section 5703 of title 5, United States Code. 
"(d)(1) The Commission shall conduct a thorough study of the 
institutional and programmatic recognition process used by the 
Department in determining institutional or programmatic eligibility 
for student participation in Federal student assistance programs 
under this Act with attention being given to the accreditation of 
various types of public and private postsecondary institutions and 
programs. 
"(2) The study shall address, analyze, and report specifically on— 
"(A) the comprehensiveness of the standards and criteria used 
by existing accreditation agencies; 
"(B) the reliability and validity of the institutional and pro-
^, 
grammatic review processes used by the existing accreditation 
agencies; 
"(C) the adequacy of the current accreditation methodology 
^ 
'5 
i'<i and system; 
"(D) alternative structures, standards, criteria, and processes 
f '^ that might be used in accrediting institutions and programs; 
"(E) the indicators of educational quality that might be incor-
,^ porated into the accreditation process; 
ja 
«(p^ ^Yie educational outcome measurements that might be 
used in the accreditation process; 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1575 
"(G) the indicators of institutional and programmatic quality 
. 
r, 
that should be provided to applicants and students; and 
"(H) alternative approaches that might be used by the Sec-
retary for institutional and programmatic recognition to permit 
student participation in Federal student assistance programs, 
as each factor bears on eligibility for participation in Federal stu-
dent assistance programs. 
"(3) The study shall also include an analysis o
f
—
-
"(A) the processes and procedures currently utilized by the 
Secretary and the Department in determining institutional and 
program eligibility for receiving Federal student assistance 
funds; 
"(B) the operations and effectiveness in carrying out eligi-
bility determination of the division of the Department referred 
to as the 'Division of Eligibility and Agency Evaluation'; 
"(C) review of alternatives to accreditation in determining 
eligibility and their acceptability; 
"(D) the role and effectiveness of, participation agreements, 
between institutions and programs and the Department in 
determining specific institutional program eligibility for Fed- 
rx .^^o 
eral funds; 
"(E) the ability of the Department to enforce conditions speci-
fied in participation agreements, including institutional and 
program audits; 
"(F) the current status, functioning, and effectiveness of the 
National Advisory Committee on Accreditation and Institu-
tional Eligibility, including its role in developing criteria for 
recognition of accrediting agencies and evaluating their success 
in assessing the quality of the education or training offered. 
"(e) The Commission shall adopt procedures allowing any in-
terested party to submit information with respect to the recognition 
process, including critiques of current accrediting agency recogni-
tion procedures, accreditation procedures, possible alternative proce-
dures, and proposed changes in criteria for recognition of individual 
accrediting agencies. 
"(f) The Commission shall prepare a narrative and statistical 
Reports. 
report consisting of— 
"(1) an overview description of the voluntary accrediting 
process used for postsecondary education in the United States; 
and 
"(2) a brief description of each accrediting agency recognized 
by the Department. 
The report shall include at least a statement of the agency's purpose 
and a description of the organizational and governance structure of 
the agency, the agency's accreditation and visitation procedures, 
employers of members of the accrediting agency's governing body, 
the agency's sources of financial support, and such background 
information as the Commission may request from the agency 
regarding the number of members, number of candidates for 
accreditation, number of members voluntarily withdrawn after 
membership, number of applications withdrawn before membership, 
number of members dropped, and number of applicants denied 
accreditation. The report shall include the types of information 
shared among the various accrediting agencies, the degree of 
duplication among accrediting agencies in the current system, and 
an analysis of reported complaints by the agency and its member 
institutions and programs. 
100 STAT. 1576 
PUBLIC LAW 99-498—OCT. 17, 1986 
Reports. 
Contracts. 
Reports. 
"(g) The Commission shall also prepare a report on— 
"(1) the history, operation, procedures, and the role and ade-
quacy of staff of the division described in subsection (e)(3)(B); 
"(2) the history and current operations of the National Ad-
visory Committee on Accreditation and Institutional Eligibility, 
including current criteria for Federal recognition of accrediting 
bodies, how the criteria were developed, possible modifications, 
and procedures for accomplishing this; and 
"(3) with respect to the Department in general, an overview of 
its role in the institutional and programmatic recognition proc-
ess as it relates to eligibility for Federal student assistance, 
including recommendations, if appropriate, on how this role 
might be changed and improved. 
"(h)(1)(A) By agreement between the President pro tempore of the 
Senate and the Speaker of the House of Representatives, the 
Commission is authorized to secure on a reimbursable basis, office 
space, clerical personnel, travel expenses, and such supplies and 
equipment as may be necessary for the Commission to carry out the 
study. 
"(B) Subject to such limitations as the President pro tempore of 
the Senate and the Speaker of the House of Representatives may 
jointly prescribe, the Commission may appoint such personnel as the 
Commission deems necessary and fix the compensation at an annual 
rate that does not exceed the rate of basic pay then payable for GS-
18 of the General Schedule under section 5332 of title 5, United 
States Code, and may procure by contract the temporary and inter-
mittent services of clerical personnel and experts or consultants, or 
organizations thereof. 
(2) In conducting the study authorized by this section, the 
Commission is authorized to— 
"(A) seek such assistance and support as may be required to 
conduct the study from appropriate Federal agencies; 
"(B) arrange for the detail of staff personnel from other 
Federal agencies; 
"(C) enter into contracts and make other arrangements, as 
may be necessary for the conduct of the study; 
(D) convene such technical groups as deemed necessary to 
secure information about the existing recognition process; and 
"(E) provide transportation and subsistence for persons serv-
ing without compensation. 
"(3) Upon request by the Commission, the head of any Federal 
agency is authorized to detail, on a reimbursable basis, any of the 
personnel of such agency to the Commission to assist in the conduct 
of the study. 
"(i) The Commission shall submit a report of the findings and 
recommendations of the study required by this section to the Post-
secondary Education Subcommittee of the Education and Labor 
Committee of the House of Representatives and the Subcommittee 
on Education, Arts, and Humanities of the Labor and Human 
Resources Committee of the Senate not later than one year after 
funds are appropriated and made available for this study. 
"(j) There are authorized to be appropriated $1,000,000 to carry 
out the study authorized by this section.". 
SEC. 1204. STUDENT REPRESENTATION. 
Title XII of the Act is further amended by adding at the end 
thereof the following new section: 
: 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1577 
STUDENT REPRESENTATION 
"SEC. 1207. The Secretary shall, in appointing individuals to any 
commission, committee, board, panel, or other body in connection 
with the administration of this Act, include individuals who are, at 
the time of appointment, attending an institution of higher edu-
cation.". 
SEC. 1205. FINANCIAL RESPONSIBILITY OF FOREIGN STUDENTS. 
Title XII of the Act is further amended by adding at the end 
thereof the following new section: 
"FINANCIAL RESPONSIBIUTY OF FOREIGN STUDENTS 
"SEC. 1208. Nothing in this Act or any other Federal law shall be 
construed to prohibit any institution of higher education from 
requiring a student who is a foreign national (and not admitted to 
permanent residence in the United States) to guarantee the future 
payment of tuition and fees to such institution by (1) making 
advance payment of such tuition and fees, (2) making deposits in an 
escrow account administered by such institution for such payments, 
or (3) obtaining a bond or other insurance that such payments will 
be made.". 
SEC. 1206. DISCLOSURES OF FOREIGN GIFTS. 
(a) GENERAL RULE.—Title XII of the Act is further amended by 
adding at the end thereof the following new section: 
"DISCLOSURES OF FOREIGN GIFTS 
"SEC. 1209. (a) Whenever any institution receives a gift from or 
enters into a contract with a foreign source, the value of which is 
$250,000 or more, considered alone or in combination with all other 
gifts from or contracts with that foreign source within a calendar 
year, the institution shall file a disclosure report with the Secretary 
on January 31 or July 31, whichever is sooner. 
"(b) Each report to the Secretary required by this Act shall 
contain: 
"(1) For gifts received from or contracts entered into with a 
foreign source other than a foreign government, the aggregate 
dollar amount of such gifts and contracts attributable to a 
particular country. The country to which a gift is attributable is 
the country of citizenship, or if unknown, the principal resi-
dence for a foreign source who is a natural p|erson, and the 
country of incorporation, or if unknown, the principal place of 
i 
business, for a foreign source which is a legal entity. 
"(2) For gifts received from or contracts entered into with a 
t 
foreign government, the aggregate amount of such gifts and 
contracts received from each foreign government. 
"(c) Notwithstanding the provisions of subsection (b), whenever 
any institution receives a restricted or conditional gift or contract 
from a foreign source, the institution shall disclose: 
"(1) For such gifts received from or contracts entered into 
with a foreign source other than a foreign government, the 
' 
amount, the date, and a description of such conditions or restric-
tions. The report shall also disclose the country of citizenship, or 
I 
if unknown, the principal residence for a foreign source which is 
a natural person, and the country of incorporation, or if 
20 u s e 1145b. 
20 u s e 1145c. 
Contracts. 
20 u s e 1145d. 
Reports. 
100 STAT. 1578 
PUBLIC LAW 99-498—OCT. 17, 1986 
unknown, the principal place of business for a foreign source 
which is a legal entity. 
'" 
' 
"(2) For gifts received from or contracts entered into with a 
foreign government, the amount, the date, a description of such 
conditions or restrictions, and the name of the foreign govern-
ment. 
State and local 
"(d)(1) If an institution described under subsection (a) is within a 
governments. 
State which has enacted requirements for public disclosure of gifts 
from or contracts with a foreign source that are substantially 
similar to the requirements of this section, a copy of the disclosure 
report filed with the State may be filed with the Secretary in lieu of 
a report required under subsection (a). The State in which the 
institution is located shall provide to the Secretary such assurances 
- 
as the Secretary may require to establish that the institution has 
met the requirements for public disclosure under State law if the 
State report is filed. 
"(2) If an institution receives a gift from, or enters into a contract 
with, a foreign source, where any other department, agency, or 
bureau of the executive branch requires a report containing require-
ments substantially similar to those required under this Act, a copy 
of this report may be filed with the Secretary in lieu of a report 
required under subsection (a). 
' (e) All disclosure reports required by this Act shall be public 
records open to inspection and copying during business hours. 
"(f)(1) Whenever it appears that an institution has failed to 
comply with the requirements of this section, including any rule or 
regulation promulgated thereunder, a civil action may be brought in 
an appropriate district court of the United States, or the appropriate 
United States court of any territory or other place subject to the 
jurisdiction of the United States, to request such court to compel 
compliance with the requirements of the Act. 
"(2) For knowing or willful failure to comply with the require-
ments of this section, including any rule or regulation promulgated 
thereunder, an institution shall pay to the Treasury of the United 
States the full costs to the United States of obtaining compliance, 
including all associated costs of investigation and enforcement. 
"(g) The Secretary may promulgate regulations to carry out the 
ministerial duties imposed on the Secretary by this section. 
"(h) For the purpose of this section— 
"(1) the term 'contract' means any agreement for the acquisi-
tion by purchase, lease, or barter of property or services by the 
foreign source, for the direct benefit or use of either of the 
parties; 
V 
"(2) the term 'foreign source' means— 
"(A) a foreign government, including an agency of a 
foreign government; 
' 
"(B) a legal entity, governmental or otherwise, created 
solely under the laws of a foreign state or states; 
-
1 jv i ' f 
"(C) an individual who is not a citizen or a national of the 
''- 
'' United States or a trust territory or protectorate thereof; 
and 
"(D) an agent, including a subsidiary or affiliate of a 
foreign legal entity, acting on behalf of a foreign source; 
"(3) the term 'gift' means any gift of money or property; 
"(4) the term 'institution' means any institution, public or 
private, or, if a multicampus institution, any single campus of 
such institution, in any State which— 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1579 
"(A) is legally authorized within such State to provide a 
program of education beyond high school; 
"(B) provides a program for which it awards a bachelor's 
degree (or provides not less than a 2-year program which is 
acceptable for full credit toward such a degree) or more 
advanced degrees; and 
"(C) is accredited by a nationally recognized accrediting 
agency or association and to which institution Federal 
^r f
; 
financial assistance is extended (directly or indirectly 
through another entity or person), or which institution 
receives support from the extension of Federal financial 
assistance to any of its subunits; and 
"(5) the term 'restricted or conditional gift or contract' means 
any endowment, gift, grant, contract, award, present, or prop-
erty of any kind which includes provisions regarding (A) the 
employment, assignment, or termination of faculty; (B) the 
establishment of departments, centers, research or lecture pro-
grams, or new faculty positions; (C) the selection or admission of 
students; or (D) the award of grants, loans, scholarships, fellow-
ships, or other forms of financial aid restricted to students of a 
specified country, religion, sex, ethnic origin, or political 
opinion.", 
(b) REPEALER.—Section 1208 of the Act, as added by subsection (a) 
of this section, is repealed on August 1,1989. 
SEC. 1207. AGGREGATE LIMIT OF AUTHORIZATION OF APPROPRIATIONS. 
Title XII of the Act is further amended by adding at the end 
thereof the following new section: 
20 u s e 1145c. 
AGGREGATE UMIT OF AUTHORIZATION OF APPROPRIATIONS 
"SEC. 1210. Notwithstanding any other provision of this Act, the 
total amount which may be appropriated to carry out the programs 
and activities authorized by this Act, other than the programs and 
activities authorized by subpart 1 of part A and part B of title IV, 
"(1) $3,166,000,000 for fiscal year 1987, 
"(2) $3,351,000,000 for fiscal year 1988, 
"(3) $3,552,000,000 for fiscal year 1989, 
"(4) $3,771,000,000 for fiscal year 1990, and 
"(5) $4,007,000,000 for fiscal year 1991.". 
20 u s e 1145e. 
TITLE XIII—EDUCATION ADMINISTRATION 
PART A—SECRETARIAL STUDIES AND EVALUATIONS 
SEC. 1301. SATISFACTORY PROGRESS. 
The Secretary, through the Office of Educational Research and 
Improvement, shall conduct a survey on the impact, if any, on 
grades of students of the amendments made by this Act to section 
484(d) of the Act. The study required by this subsection shall be 
conducted over the 5-year period ending September 30, 1991. The 
Secretary, after the end of each year of the study, shall submit to 
the Congress a report of the survey required by this subsection, 
together with such recommendations as the Secretary deems 
appropriate. 
20 u s e 1091 
note. 
Reports. 
100 STAT. 1580 
PUBLIC LAW 99-498—OCT. 17, 1986 
20 use 1121 
SEC. 1302. NATIONAL ENDOWMENT FOR INTERNATIONAL STUDIES. 
^°^' 
(a) STUDY REQUIRED.—The Secretary shall, in consultation with 
the Director of the United States Information Agency, the Director 
of the Agency for International Development, the Secretary of State, 
and the Secretary of Defense, conduct a study on the establishment 
of a National Endowment for International Studies. The study shall 
develop a program, a funding plan, and priorities for such an 
Endowment. 
(b) CONDUCT OP STUDY.—In carrying out the study required by this 
section, the Secretary shall consider— 
(1) the extent of the need for international studies programs 
at all educational levels, not served by this title; 
(2) the programs at the Agency for International Develop-
ment, the United States Information Agency, and the 
Departments of State, Defense, and Education which can be 
coordinated to increase the scope and number and kinds of 
participants in international educationsd programs; 
(3) the feasibility of an Endowment for International Studies, 
by whom it shall be administered, and procedures for receiving 
corporate and other private contributions for supplemental 
funding, similar to Treasury fund accounts at other Federal 
agencies; and 
,, 
(4) a comprehensive evaluation of the weaknesses and 
strengths in international education and foreign language train-
ing at all levels of education in our Nation and the role of the 
Endowment to remedy these weaknesses, and encourage expan-
sion of these strengths. 
(c) REPORT.—The Secretary shall prepare and submit to the Con-
gress, not later than one year after the date of enactment of this 
section, a report on the study required by this section, together with 
such recommendations, including recommendations for legislation, 
as the Secretary deems appropriate. 
, 
20USC1221e-l 
SEC. 1303. DATA STUDY REQUIRED. 
^'^^' 
(a) CONDUCT OP STUDIES.—The Secretary shall, through the Office 
of Education Research and Improvement or the Center for Edu-
cation Statistics, shall conduct the studies required by this section 
and submit reports thereon to the Congress not later than Septem-
ber 30, 1990. The reports shall contain such recommendations, 
including recommendations for legislation, as the Secretary deems 
appropriate. 
(b) COST STUDY REQUIRED.MD The Secretaiy shall conduct a study 
on the escalating cost of higher education. The study required by 
this section shall— 
(A) identify the current cost of obtaining a higher education 
and determine how that cost has changed in recent years, 
(B) determine the specific causes of such changes in cost and 
the extent to which those causes have contributed to such 
^'' 
' 
changes, 
(C) forecast the future cost of obtaining a higher education 
with consideration given to prospective demographic changes in 
student enrollments, 
.
&
r » ^; i 
(D) evaluate the impact of such changes in cost on institutions 
of higher education, their students, and lower- and middle-
income families, 
(E) make recommendations on how such changes in cost can 
be minimized in the future, and 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1581 
(F) outline State and Federal policy options which may help to 
minimize such changes in cost in the future. 
(2) In conducting such study, the Secretary shall give special 
consideration to the impact of escalating costs on lower- and middle-
income students and families, the impact of escalating costs on 
female and minority students, the impact of escalating costs on the 
career choices made by students, and the relationship between 
escalating costs and the Federal student financi£d assistance 
programs. 
(3) During the conduct of such study, the Secretary shall consult 
frequently with the Department of Education, the Chairman of the 
Senate Committee on Labor and Human Resources, and the Chair-
man of the House Committee on Education and Labor. 
(c) STUDENT AID RECIPIENT SURVEY.—(1) The Secretary shall 
survey student aid recipients on a regular cycle, but not less than 
once every 3 years— 
(A) to identify the population of students receiving Federal 
student aid; 
(B) to determine the income distribution and other socio-
economic characteristics of federally aided students; 
(C) to describe the combinations of aid from State, Federal, 
and private sources received by students from all income 
groups; 
(D) to describe the debt burden of loan recipients and their 
capacity to repay their education debts; and 
(E) to disseminate such information in both published and 
machine readable form. 
(2) The survey shall be representative of full-time and part-time, 
undergraduate, graduate, and professional and current and former 
students in all t3rpes of institutions, and should be designed and 
administered in consultation with the Congress and the postsecond-
ary education community. 
(d) TEACHER SUPPLY AND DEMAND.—(1) The Secretary shall utilize 
the legislative authority under section 406(b) of the General Edu-
cation Provisions Act to annually assess current and future supply 
and demand for teachers with particular attention to— 
(A) long-term and short-term shortages of personnel in var-
ious subject areas or teaching specialties; 
(B) shortages in particular States or regions; 
(C) the number of minorities entering teaching; 
(D) the number of women and minorities entering educational 
administration; 
(E) the effect of State curriculum and graduation require-
ments on the need for teachers in each Stete; 
(F) the extent to which demographic characteristics of persons 
currently employed as teachers and persons studjdng to be 
teachers mateh the characteristics of the students in each Stete 
(race, age, sex); 
(G) the academic qualifications of prospective teachers and 
the academic preparation of persons currently preparing to be 
teachers; 
(H) the effect of the introduction of Stete mandated teacher 
competency 
tests 
on 
the 
demographic 
and 
educational 
characteristics of teachers and the supply of teachers; and 
(I) an assessment of new and emerging specialties and the 
technologies, academic subjects, and occupational areas requir-
ing vocational education, with emphasis on the unique needs for 
State and local 
governments. 
Women. 
Minorities. 
State and local 
governments. 
20 u s e 1221e-l. 
100 STAT. 1582 
PUBLIC LAW 99-498—OCT. 17, 1986 
Contracts. 
20 u s e 1011 
note. 
11 u s e 1301 et 
seq. 
Reports. 
20 u s e 1070a 
note. 
Reports. 
preparing an adequate supply of vocational teachers of handi-
capped students, with added emphasis on the preparation re-
quired to teach combined classrooms of handicapped, or other 
highly targeted groups of students and other students within a 
vocational education setting. 
(2) The analysis conducted under this subsection may include 
assessment of other educational needs identified by the Congress, 
including an assessment of the need for instructional equipment and 
materials in elementary and secondary schools and in institutions of 
higher education. 
(e) EQUITABLE STUDENT AID FOR FARM FAMILIES.—The Secretary 
shall conduct a study of financial aid formulas under title IV of the 
Act for students in postsecondary educational institutions with 
special attention to devising a more equitable formula for farm 
families. 
SEC. 1304. EVALUATION OF CONTINUING EDUCATION. 
(a) EVALUATION.—The Secretary shall enter into a contract with a 
qualified entity to study and evaluate the programs established 
under part A of this title. 
(b) SECRETARY'S RESPONSIBILITIES.—The Secretary shall assist in 
evaluating the status and progress of adult education and post-
secondary continuing education in achieving the purposes of this 
title. Such assistance shall include— 
(1) an analysis of the findings of the r°eport under subsection 
(a) together with suggestions for improvements in planning or 
program operation; and 
(2) an information network on research in adult and continu-
ing education, the operation of model or innovative programs, 
successful experiences in the planning, administration, and con-
duct of adult and continuing education programs, and advances 
in curriculum and instructional practices and technologies. 
(c) REPORT.—Not later than January 1, 1990, the Secretary shall 
submit a report to the Congress on the program evaluations re-
quired under this title and on any progress in fulfilling the goals 
and purposes of this title. The Secretary may include in the report 
appropriate recommendations or legislative proposals. 
SEC. 1305. STUDY OF BANKRUPTCY TREATMENT OF STUDENTS. 
The Secretary shall conduct a study of the treatment of students 
under chapter 13 of title 11, United States Code, relating to the 
discharge of student loan indebtedness in bankruptcy proceedings, 
and of the effect of including such students under that provision of 
that law. The Secretary shall prepare and submit a report to the 
Congress on the study required by this section not later than 3 
months after the date of enactment of this Act. 
SEC. 1306. STUDY OF PELL GRANT LESS THAN HALF-TIME STUDENTS. 
The Secretary shall conduct a study to determine the number of 
less than half-time students who would be eligible for Pell grants by 
reason of having an expected family contribution of $0 and by 
reason of having an expected family contribution of $0-$200 for the 
appropriate academic years. The Secretary shall prepare and submit 
a report to the Congress not later than September 30, 1988, on the 
results of the study required by this section. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1583 
SEC. 1307. AUTHORIZATION OF APPROPRIATIONS. 
There are authorized to be appropriated $2,700,000 for the fiscal 
year 1987 and for each of the 2 succeeding fiscal years to carry out 
the provisions of this part. 
PART B—GENERAL ACCOUNTING OFFICE REPORTS 
SEC. 1311. STUDY OF PRACTICES OF STATE GUARANTY AGENCIES AND 
20 USC 1071 
MULTISTATE GUARANTORS UNDER THE GUARANTEED STU- 
^°^-
DENT LOAN PROGRAM. 
(a) STUDY REQUIRED.—The Comptroller General shall conduct a 
complete study of the practices of State guaranty agencies and 
multistate guarantors under the guaranteed student loan program 
authorized by part B of title IV of the Act. The study shall inves-
tigate, on a comparative basis— 
(1) due diligence practice of lenders; 
(2) default rates and recovery rates on student loans; 
(3) changes in loan volume; 
(4) methods of soliciting student borrowers; 
(5) potential for fraudulent double borrowing by students; 
(6) participation agreements between the types of guarantor 
' 
, 
and lenders; 
(7) eligible institution participation agreements; 
(8) adequacy of reserved funds in relation to guaranty 
commitments made by the agency and the default risk which 
" ' 
such commitments represent, as reflected by the socio-economic 
background of the borrowers, the category of institution at-
tended, and the historical experience of the agency; 
I 
(9) types of services provided to lenders, eligible institutions, 
and borrowers; 
(10) use of funds generated through participation in the 
guaranteed student loan program by amount and nature of 
expenses for administrative support for programs other than 
the guaranteed student loan program; 
(11) to what extent the guarantors meet the requirements of 
truth-in-lending provisions; 
(12) profile of borrowers and defaulters of loans guaranteed by 
- 
the agency and an assessment of the default risks inherent in 
such loans; 
(13) coordination of the loan guaranty program with grant 
programs; 
(14) general student access to loan assistance; and 
(15) need for administrative cost allowances by particular 
guaranty agencies in relation to the default risk faced by the 
agency, the administrative costs incurred, or needed to be in-
curred by the agency, and other factors relevant to the cost of 
guaranteeing loans under the program. 
Ot)) REPORT.—The Comptroller Cieneral of the United States shall 
prepare and submit a report, not later than 2 years after the date of 
enactment of this Act, to the Committee on Labor and Human 
Resources of the Senate and the Committee on Education and Labor 
of the House of Representatives on the flndings of the study re-
quired by subsection (a) of this section, together with such rec-
ommendations as the Comptroller General deems appropriate. 
100 STAT. 1584 
PUBLIC LAW 99-498—OCT. 17, 1986 
20 use 1071 
note. 
Reports. 
20 u s e 1071 
note. 
Reports. 
20 use 1071 
note. 
SEC. 1312. STUDY OF USE OF MULTIPLE-YEAR LINES OF CREDIT. 
The Comptroller General shall evaluate the feasibility and effi-
ciency of permitting students to establish lines of credit with eligible 
lenders under part B of title IV of the Act that cover more than 2 
years of attendance at an institution of higher education. Such 
evaluation shall determine the extent to which such an arrange-
ment would reduce the administrative costs associated with making 
separate loans annually under such part. In conducting such evalua-
tion, the Comptroller General shall consult institutions of higher 
education and eligible lenders under such part. Within 2 years after 
the date of enactment of this Act, the Comptroller General shall 
submit to the Congress a report on the results of such evaluation 
together with such recommendations as the Secretary considers 
appropriate. 
SEC. 1313. STUDY OF MULTIPLE DISBURSEMENT. 
The Comptroller General shall evaluate the impact of the mul-
tiple disbursement system required for student loans under part B 
of title IV of the Act on the ability of both students and institutions 
of higher education to meet their expenses as they arise. Such 
evaluation shall include an assessment of any other impacts of such 
system on such students or institutions that the Comptroller Gen-
eral determines to be significant. A report on the results of such 
evaluation shall be submitted to the Congress not later than 2 years 
after the date of enactment of this Act. 
SEC. 1314. STUDENT LOAN CONSOLIDATION. 
The Comptroller General shall evaluate the cost, efficiency, and 
impact of the consolidation loan program established by the amend-
ments made by this Act to part B of title IV of the Act and shall 
report to the Congress not later than 2 years after the date of 
enactment of this Act on the findings and recommendations 
required by this subsection. 
nf's 
1 
PART C—COSTS OF POSTSECONDARY EDUCATION 
20 use 1221-1 
SEC. 1321. NATIONAL COMMISSION ON RESPONSIBILITIES FOR FINANCING 
note. 
POSTSECONDARY EDUCATION. 
(a) FINDINGS.—The Congress finds— 
(1) that institutions of higher education in our Nation and 
their human and intellectual resources are critical to the future 
*
* * of the American society, and the Nation's economic potential, 
its strength, security, and freedom, and the quality of life for all 
citizens are tied to the quality and extent of higher education 
available; 
(2) that it is the responsibility of the Federal Government to 
establish a clearly defined national policy regarding— 
(A) the role and expectations of respective institutions in 
society (the family unit, institutions of higher education, 
; 
* - government, and the individual in financing the costs of 
'5*> 
postsecondary education); and 
(B) the most efficient and effective use of limited Federal, 
State, and private resources for supplementing the family 
effort in financing postsecondary education and for creating 
v»- ^ J incentives for individuals and families to plan for financing 
postsecondary education; and 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1585 
(3) the appropriate response to economic, budgetary, demo-
graphic, and social changes which will require individuals, fami-
lies, institutions of higher education, and government to plan 
and adapt to the future needs for student financial assistance 
for postsecondary education. 
O
b
) EsTABUSHMENT OF THE COMMISSION.—(1) There is established 
as an independent agency in the executive branch a commission to 
be known as the National Commission on Responsibilities for 
Financing Postsecondary Education (hereafter in this section re-
ferred to as the "Commission"). 
(2) The Commission shall be composed of 9 members, 3 of whom 
shall be appointed by the President, 3 of whom shall be appointed by 
the Speaker of the House of Representatives, and 3 of whom shall be 
appointed by the majority leader of the Senate. The membership of 
the Commission shall provide expertise and experience in the provi-
sion and financing of postsecondary education, including student 
financial 
aid administrators, secondary school administrators, 
individuals skilled in education economics research, individuals 
having expertise in the development of standards and systems of 
need analysis for student assistance programs, and individuals with 
particular expertise in credit financing for postsecondary education. 
(c) DUTIES OF THE COMMISSION.— 
(1) IN GENERAL.—The Commission shall study and investigate 
the extent to which— 
(A) there is a consistent and coherent Federal policy 
regarding the appropriate family role in financing the costs 
of postsecondary education for family members; 
(B) the current Federal laws and regulations promote the 
stated Federal policy; and 
(C) the extent to which State laws which remove parental 
State and local 
responsibilities for children over 18 years of age conflict 
governments, 
with Federal policy in this area. 
(2) REPORT AND RECOMMENDATIONS.—The Commission shall— 
(A) summarize the appropriate findings of the National 
Commission on Student Financial Assistance; 
(B) recommend to the Congress a comprehensive analysis 
on the extent to which a consensus exists regarding the 
appropriate role of the family in financing postsecondary 
education; and 
(C) to the extent that a consensus exists, recommend 
. .': 
changes in current law that would be required to achieve 
the desired Federal policy, including recommendations on 
Federal incentives to encourage families to plan and save 
for their financial responsibilities in financing postsecond-
ary education for family members taking into account the 
needs of future generations. 
(d) SPECIFIC REQUIREMENTS.—In canying out its responsibilities 
under subsection (c), the Commission shall make a study of the 
following areas: 
(1) NEED ANALYSIS.— 
(A) The most appropriate mechanisms for measuring stu-
dent and family ability to pay for postsecondary education. 
(B) The incentives and disincentives for family saving in 
existing need analysis systems. 
(C) The feasibility and impact of different need analysis 
systems £Uid eligibility formulas for determining student 
100 STAT. 1586 
PUBLIC LAW 99-498—OCT. 17, 1986 
"-- 
and family contributions for Federal and non-Federal 
grant, loan, and work-study programs. 
(D) The extent to which existing systems of need analysis 
r J* 
take into account the circumstances of older and non-
traditional students, students with minor dependents, and 
divorced and separated parents. 
(E) The extent to which existing systems of need analysis 
recognize differing regional economic conditions. 
(F) The feasibility of a simplified need analysis system for 
determining ability to pay for low-income families, economi-
cally disadvantaged families, and families receiving public 
assistance benefits. 
(G) The postsecondary education financing partnership, 
and the impact of external influences, such as economic 
conditions or State-level initiatives, that affect the balance 
of financial support among students and their families, the 
Federal Government, States, postsecondary institutions, 
credit institutions, and the private sector. 
(2) STUDENT INDEPENDENCE.—The most appropriate mecha-
nisms and factors to be considered in determining student 
independence and self-support and in determining when fami-
lies should be expected to provide parental financial informa-
tion in determining expected family contributions for Federal 
student assistance programs. 
(3) PARENTAL RESPONSIBILITY.—In consultation and coopera-
tion with associations of higher education institutions and 
administrators, secondary schools, student and parent associa-
tions, and other organizations, the most effective means of 
reinforcing and promoting the principle of parental responsibil-
ity for contributing, to the extent that they are able, to the costs 
of their children's postsecondary education. 
(4) STUDENT RESPONSIBIUTY.—The most effective mechanisms 
for measuring student ability to contribute to educational cost 
through earnings and savings, the extent to which such mecha-
nisms reflect the circumstances of students from disadvantaged 
families, and the existing levels of student contributions from 
past, current, and future earnings. 
(5) INSTITUTIONAL RESPONSIBILITY.—The most effective mecha-
nisms of reinforcing and promoting the principle of institutional 
responsibility for providing need-based aid to students attending 
postsecondary institutions. 
(6) GOVERNMENTAL RESPONSIBILITY.—The most efficient and 
appropriate mechanisms for providing student assistance from 
the various levels of government. 
(7) EARLY INFORMATION, PLANNING, AND INFORMATION TECH-
NOLOGY.—The extent to which programs providing early 
information on postsecondary education, costs, and financial aid 
programs to students and their families influence educational 
opportunity and family saving. 
(e) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 
be appropriated to carry out this part $1,000,000. 
(f) TERMINATION.—The Commission shall terminate 2 years after 
the initial appointment of members. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1587 
PART D—LIBRARY RESOURCES 
SEC. 1331. STUDY OF THE EFFECTIVENESS OF THE NEEDS CRITERIA FOR 
20 USC 1029 
THE 
COLLEGE 
LIBRARY 
RESOURCE 
PROGRAM 
AU- 
note. 
THORIZED. 
(a) STUDY REQUIRED.—The National Commission on Libraries and 
Information Sciences shall conduct a study on the effectiveness in 
directing assistance to libraries with the greatest need of the needs 
criteria specified in section 211 of the Act. 
Ante, p. 1287. 
(b) REPORT TO CONGRESS.—The National Commission on Libraries 
and Information Sciences shall prepare and submit a report to the 
Congress not later than 3 years after the conclusion of the first fiscal 
year in which appropriations are made for the College Library 
Resource Program authorized by section 211 of the Act, together 
with such recommendations as the Commission on Libraries and 
Information Sciences deems appropriate. 
^ 
' 
PART E—NATIONAL ACADEMY OF SCIENCES STUDY 
SEC. 1341. VOLUNTEERS. 
20 USC 1221-1 
(a) STUDY REQUIRED.—The National Academy of Sciences shall "°*^ 
conduct a thorough study of how volunteers can best be used in the 
classroom. The study required by this section shall include— 
(1) the feasibility of using recipients of student loans made, 
assured, or guaranteed under part B of title IV of the Act or 
part E of such title as part of repayment of such loems; 
(2) the use of older Americans as such volunteers; 
(3) the use of business persons and other professionals as 
volunteers; and 
(4) the place of incentives to encourage volunteerism. 
The study required by this section shall examine the methods of 
using volunteers designed to provide the greatest flexibility for local 
educational agencies. 
(b) REPORTS REQUIRED.—The National Academy of Sciences shall, 
not later than one year after the date of enactment of this Act, 
prepare and submit to the Congress their respective reports, to-
gether with a description of programs on the use of volunteers and 
with such recommendations as the Secretary deems appropriate. 
(c) AvAiLABiUTY O
F FuNDS.—The Secretary shall, from funds 
available for the administration of the Department of Education, 
make available not to exceed $500,000 for the study required by this 
section. 
PART F—FAULKNER UNIVERSITY 
SEC. 1351. RELIEF OF LIABILITY. 
(a) REUEF OF LIABILITY.—Faulkner University (formerly Alabama Alabama. 
Christian College) of Montgomery, Alabama, is relieved of all 
liability— 
(1) to repay to the United States the sum of $147,681.39, plus 
(2) to pay $7,822.50 to the National Direct Student Loan Fund 
of the Faulkner University, 
representing pajnnents inadvertently made pursuant to subpart 1 
and subpart 2 of part A and part C of title IV of the Higher 
Education Act of 1965 and direct student loans inadvertently made Ante, p. 1308. 
7-j_194 0 - 89 - 17 : QL. 3 Part2 
AKk 
100 STAT. 1588 
PUBLIC LAW 99-498—OCT. 17, 1986 
under part E of such title IV prior to the receipt of eligibility status 
for the junior and senior years of the baccalaureate degree programs 
offered by Faulkner University. In the audit and settlement of the 
f f 
accounts of any certifying or disbursing officer of the United States, 
full credit shall be given for the amount for which liability is 
relieved by this section. 
(b) SPECIAL RULE.—For the purpose of part B of title IV of the 
Higher Education Act of 1965, each student in attendance at the 
Faulkner University of Montgomery, Alabama, receiving a federally 
insured loan for the academic year 1981-1982 and for the academic 
year 1982-1983 pursuant to such part B shall be deemed to be in 
attendance at an eligible institution for that academic year. 
1
^
; 
PART G—AuEN YOUTH EDUCATION OPPORTUNITY PANEL 
20 use 1091 
SEC. 1361. DENIAL OF STUDENT ASSISTANCE TO CERTAIN NONCITIZENS. 
(a) EsTABUSHMENT OF PANEL.—(1) There is established in the 
Department of Education a panel to be known as the "Alien Youth 
Education Opportunity Panel" (hereafter in this section referred to 
- • - 
^ -• 
as the "Panel"). 
-if ! 
(2) The Panel shall be composed of 7 members, 3 of whom shall be 
appointed by the Secretary, 2 of whom shall be appointed by the 
Speaker of the House of Representatives, and 2 of whom shall be 
appointed by the Majority Leader of the Senate. 
(b) DUTIES OF PANEL.—The Panel shall study and investigate the 
extent to which the requirements of section 484(aK5) of the Act 
result in the denial of student assistance to long-term residents of 
the United States who have graduated from United States high 
schools and the extent to which that denial deprives those individ-
uals of an equal educational opportunity. 
(c) REPORT AND RECOMMENDATIONS.—The Panel shall submit a 
report of its findings and recommendations to the Secretary, the 
President, and the Congress not later than 2 years after the date of 
enactment of this section. 
(d) ADMINISTRATIVE AND CLERICAL SUPPORT.—The Secretary shall 
provide the Panel with such administrative and clerical support as 
it may require to carry out its activities under this section. 
(e) COMPENSATION AND EXPENSES.—(1) Members of the Panel who 
are officers or full-time employees of the United States shall serve 
without compensation in addition to that received for their services 
as officers or employees of the United States; but they may be 
allowed travel expenses, including per diem in lieu of subsistence, as 
authorized by section 5703 of title 5, United States Code, for persons 
in the Government service employed intermittently. 
(2) Members of the Panel who are not officers or full-time employ-
ees of the United States may each receive reimbursement for travel 
.0 ivi/i expenses incident to attending Panel meetings, including per diem 
in lieu of subsistence, as authorized by section 5703 of title 5, United 
States Code, for persons in the Government service employed inter-
mittently. 
(f) ACCESS TO INFORMATION.—The Panel is authorized to secure 
directly from any executive department, bureau, agency, board, 
commission, office, independent establishment, or instrumentality 
information, suggestions, estimates, and statistics for the purpose of 
this section and each such department, bureau, agency, board, 
3
W
. n >-.i 
commission, office, independent establishment, or instrumentality is 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1589 
authorized and directed, to the extent permitted by law, to furnish 
such information, suggestions, estimates, and statistics directly to 
the Panel. 
PART H—BOSTON COLLEGE 
SEC. 137L DEBT PROVISION. 
The Secretary is directed to cancel all annual debt service obliga-
tions of the receiving institution for fiscal years 1987, 1988, 1989, 
and 1990 of which the total amount to be cancelled shall not exceed 
$2,700,000 adjusted as required in fiscal year 1990, for the Depart- 
'^ "
^ ' '*•' 
ment of Education Project Loan #5-1-00665-0 dated August 5, 1981, 
and shall adjust the loan agreement to reflect the change required 
by this section without any other provision of law being applicable. 
PART I—CARL ALBERT CONGRESSIONAL RESEARCH AND STUDIES 
CENTER 
SEC. 1381. APPROPRIATION PROVISION. 
Funds appropriated in Public Law 97-377 under the heading 
., ,p,j ^,. 
"HIGHER AND CONTINUING EDUCATION", for the Carl Albert Congres-
sional Research and Studies Center, under the terms of H.R. 3598 
(97th Congress) shall be available as a direct appropriation without 
regard to section 4(a) of H.R. 3598 (97th Congress). 
TITLE XIV—EDUCATION RESEARCH AND STATISTICS 
SEC. 1401. EDUCATIONAL RESEARCH AND IMPROVEMENT. 
(a) OFFICE OF EDUCATIONAL RESEARCH AND IMPROVEMENT.—Sec- 
tsai i v.* 
tion 405 of the General Education Provisions Act (20 U.S.C. 1221e) is 
amended to read as follows: 
"OFFICE OF EDUCATIONAL RESEARCH AND IMPROVEMENT 
"SEC. 405. (aXD The Congress declares it to be the policy of the 
United States to provide to every individual an equal opportunity to 
,
, 
receive an education of high quality regardless of race, color, reli- 
^ 
gion, sex, age, handicap, national origin, or social class. Although 
the American educational system has pursued this objective, it has 
not attained the objective. Inequalities of opportunity to receive 
high quality education remain pronounced. To achieve the goal of 
quality education requires the continued pursuit of knowledge about 
education through research, improvement activities, data collection, 
and information dissemination. While the direction of American 
education remains primarily the responsibility of State and local 
governments, the Federal Government has a clear responsibility to 
provide leadership in the conduct and support of scientific inquiry 
into the educational process. 
"(2) The Congress further declares it to be the policy of the United 
States to— 
"(A) promote the quality and equity of American education, 
"(B) advance the practice of education as an art, science, and 
profession; 
"(C) support educational research of the highest quality; 
"(D) strengthen the educational research and development 
system; 
100 STAT. 1590 
PUBLIC LAW 99-498—OCT. 17, 1986 
20 u s e 3412. 
20 u s e 3419. 
Post, p. 1597. 
Research and 
development. 
Women. 
Aged persons. 
Minorities. 
Handicapped 
persons. 
Disadvantaged 
persons. 
i!pi 
"(E) improve educational techniques and training; 
OJ 
"(F) assess the national progress of this Nation's schools and 
educational institutions, particularly special populations; and 
"(G) collect, analyze, and disseminate statistics and other data 
related to education in the United States and other nations. 
"(3) For purposes of this section— 
"(A) the term 'Assistant Secretary' means the Assistant Sec-
retary for Educational Research and Improvement established 
by section 202 of the Department of Education Organization 
Act; 
"(B) the term 'Council' means the National Advisory Council 
on Educational Research and Improvement established by 
subsection (c); 
"(C) the term 'educational research' includes basic and ap-
plied research, development, planning, surveys, assessments, 
evaluations, investigations, experiments, and demonstrations in 
the field of education and other fields relating to education; 
"(D) the term 'Office' means the Office of Educational Re-
search and Improvement established by section 209 of the 
Department of Education Organization Act; and 
"(E) the terms 'United States' and 'State' include the District 
of Columbia and the Commonwealth of Puerto Rico. 
"(bXl) It shall be the purpose of the Office to carry out the policies 
set forth in subsection (a) of this section. The Office shall be adminis-
tered by the Assistant Secretary and shall include— 
"(A) the National Advisory Council on Educational Research 
and Improvement established in subsection (c); 
"(B) the Center for Education Statistics established by section 
406; and 
"(C) such other units as the Secretary deems appropriate to 
carry out the purposes of the Office. 
"(2) The Office shall, in accordance with the provisions of this 
section, seek to improve education in the United States through 
concentrating the resources of the Office on the priority research 
and development needs described in paragraph (3). 
"(3) The needs to which paragraph (2) apply are— 
"(A) improving student achievement; 
"(B) improving the ability of schools to meet their responsibil-
ities to provide equal educational opportunities for all students, 
including those with limited English-speaking ability, women, 
older students, part-time students, minority students, gifted and 
talented students, handicapped students, and students who are 
socially, economically, or educationally disadvantaged; 
"(C) collecting, analyzing, and disseminating statistics and 
other data related to education in the United States and other 
nations; 
"(D) improving the dissemination and application of knowl-
edge obtained through educational research and data gathering, 
particularly to education professionals and policy makers; 
"(E) encouraging the study of the sciences, the arts, and the 
humanities, including foreign languages and cultures; 
"(F) improving the data base of information on special popu-
lations and their educational status; 
"(G) conducting research on adult educational achievement, 
particularly literacy and illiteracy as it affects employment, 
crime, health, and human welfare; 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1591 
- 
"(H) conducting research on postsecondary opportunities, 
especially access for minorities and women; and 
"(I) conducting research on education professionals, especially 
at the elementary and secondary levels including issues of 
recruitment, training, retention, and compensation. 
"(4) The Secretary shall publish proposed research priorities in 
the Federal Register every two years, not later than October 1, and 
shall allow a period of sixty days for public comments and sugges-
tions. 
"(cXD The Council shall consist of fifteen members appointed by 
the President, by and with the advice and consent of the Senate. In 
addition, there shall be such ex officio members who are officers of 
the United States as the President may designate, including the 
Assistant Secretary. A majority of the appointed members of the 
Council shall constitute a quorum. The chairperson of the Council 
shall be designated by the President from among the appointed 
members. Ex officio members shall not have a vote on the Council. 
The members of the Council shall be appointed to ensure that the 
Council is broadly representative of the general public; the edu-
cation 
professions, including practitioners; policymakers 
and 
researchers; and the various fields and levels of education. 
"(2XA) Except as provided in subparagraph (B), members shall be 
appointed to terms of three years. 
"(B) Of the members first appointed— 
"(i) five shall be appointed for terms of one year; 
"(ii) five shall be appointed for terms of two years; and 
"(iii) five shall be appointed for terms of three years; 
as designated by the President at the time of appointment. 
"(C) Any member appointed to fill a vacancy occurring before the 
expiration of the term for which the predecessor was appointed shall 
be appointed only for the remainder of such term. A member may 
serve after the expiration of a term until a successor has taken 
office. 
"(D) An appointed member who has been a member of the Council 
for six consecutive years shall be ineligible for appointment to the 
Council during the two-year period following the expiration of the 
sixth year. 
"(3) The Council shall— 
"(A) advise the Secretary and the Assistant Secretary on the 
policies and activities carried out by the Office; 
"(B) review and publicly comment on the policies and activi-
ties of the Office; 
"(C) conduct such activities as may be necessary to fulfill its 
functions under this subsection; 
"(D) prepare such reports to the Secretary on the activities of 
the Office as are appropriate; and 
"(E) submit, no later than March 31 of each year, a report to 
the President and the Congress on the activities of the Office, 
and on education, educational research, and data gathering in 
general. 
"(dXD In order to carry out the objectives of the Office under this 
section, the Secretary within the limits of available resources 
shall— 
"(A) conduct educational research; 
"(B) collect, analyze, and disseminate the findings of edu-
cation research; 
"(C) train individuals in educational research; 
Federal 
Register, 
publication. 
Reports. 
100 STAT. 1592 
PUBLIC LAW 99-498—OCT. 17, 1986 
5 use 5101 et 
seq., 5331 et seq. 
20 use 3419. 
Grants. 
Contracts. 
^t 
"(D) assist and foster such research, collection, dissemination, 
and training through grants, cooperative agreements, and tech-
nical assistance; 
"(E) promote the coordination of educational research and 
research support within the Federal Government and otherwise 
assist and foster such research; and 
"(F) collect, analyze, and disseminate statistics and other data 
related to education in the United States and other nations. 
"(2)(A) The Secretary may appoint, for terms not to exceed three 
years (without regard to the provisions of title 5 of the United States 
Code governing appointment in the competitive service) and may 
compensate (without regard to the provisions of chapter 51 and 
subchapter III of chapter 53 of such title relating to classification 
and General Schedule pay rates) such scientific or professional 
employees of the Office as the Secretary considers necessary to 
accomplish its functions. The Secretary may also appoint and com-
pensate not more than one-fifth of the number of full-time, regular 
scientific or professional employees of the Office without regard to 
such provisions. The rate of basic pay for such employees may not 
exceed the maximum annual rate of pay for grade GS-15 under 
section 5332 of title 5 of the United States Code, except that the pay 
of any employee employed before the date of enactment of the 
Higher Education Amendments of 1986 shall not be reduced by 
application of such maximum pay limitation. 
"(B) The Secretary may reappoint employees described in 
subparagraph (A) upon presentation of a clear and convincing jus-
tification of need, for one additional term not to exceed three years. 
All such employees shall work on activities of the Office and shall 
not be reassigned to other duties outside the Office during their 
term. 
"(C) Individuals who are employed on the date of enactment of 
this Act and were employed by such Office on April 1, 1986, and who 
were employed under excepted hiring authority provided by section 
209 of the Department of Education Organization Act or this section 
may continue to be employed for the duration of their current term. 
"(3XA) The Secretary may carry out the activities in para-
graph (D— 
, ,,,. 
"(i) directly; 
"(ii) through grants, contracts, and cooperative agreements 
with institutions of higher education, public and private 
organizations, institutions, agencies, and individuals; and 
"(iii) through the provision of technical assistance. 
"(B) When making competitive awards under this subsection, the 
Secretary shall— 
"(i) solicit recommendations and advice regarding research 
priorities, opportunities, and strategies from qualified experts, 
such as education professionals and policymakers, personnel of 
the regional education laboratories and of the research and 
development centers supported under paragraph (4), and the 
Council, as well as parents and other members of the general 
public; 
"(ii) employ suitable selection procedures utilizing the proce-
dures and principles of peer review, except where such peer 
review procedures are clearly inappropriate given such factors 
as the relatively small amount of a grant or contract or the 
exigencies of the situation; and 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1593 
"(iii) determine that the activities assisted will be conducted 
efficiently, will be of high quality, and will meet priority 
research and development needs under this section. 
"(C) Whenever the Secretary enters into a cooperative agreement 
under this section, the Secretary shall negotiate any subsequent 
modifications in the cooperative agreement with all parties to the 
agreement affected by the modifications. 
"(4)(A) In carrying out the functions of the Office, the Secretary 
shall, in accordance with the provisions of this subsection, support— 
"(i) regional educational laboratories established by public 
agencies or private nonprofit organizations to serve the needs of 
A
. a specific region of the Nation under the guidance of a region-
ally representative governing board, the regional agendas of 
which shall, consistent with the priority research and develop-
ment needs established by subsection (b) (2) and (3), be deter-
mined by the governing boards of such labs; 
"(ii) research and development centers established by institu-
tions of higher education, by institutions of higher education in 
consort with public agencies or private nonprofit organizations, 
or by interstate agencies established by compact which operate 
subsidiary bodies established to conduct postsecondary edu-
" 
cational research and development; 
.- 
"(iii) meritorious unsolicited proposals for educational re-
search and related activities that are authorized by this subsec-
tion; and 
< 
"(iv) proposals that are specifically invited or requested by the 
"C Secretary, on a competitive basis, which meet objectives au-
thorized by this subsection. 
"(B) Prior to awarding a grant or entering into a contract for a 
regional educational laboratory or research and development center 
under subparagraph (A)(i) or (A)(ii), the Secretary shall invite ap-
plicants to compete for such laboratories and centers through notice 
published in the Federal Register. 
"(C) Each application for assistance under subparagraph (A) (i) or 
(ii) as a regional educational laboratory or a research and develop-
ment center shall contain such information as the Secretary may 
reasonably require, including assurances that the applicant will— 
"(i) be responsible for the conduct of the research and develop-
', 
ment activities; 
,' 
"(ii) prepare a long-range plan relating to the conduct of such 
research and development activities; 
"(iii) ensure that information developed as a result of such 
' 
research and development activities, including new educational 
^
^ 
methods, practices, techniques, and products, will be appro-
'* 
priately disseminated; 
"(iv) provide technical assistance to appropriate educational 
agencies and institutions; and 
"(v) to the extent practicable, provide training for individuals, 
•' 
emphasizing training opportunities for women and members of 
J 
minority groups, in the use of new educational methods, prac-
^ 
tices, techniques, and products developed in connection with 
such activities. 
"(D) No grant may be made and no contract entered into for 
assistance described under subparagraph (A) (i) or (ii) unless— 
"(i) proposals for £issistance under this subsection are solicited 
from regional educational laboratories and research and devel-
opment centers by the Office; 
Grants. 
Contracts. 
Federal 
Register, 
publication. 
100 STAT. 1594 
PUBLIC LAW 99-498—OCT. 17,1986 
Grants. 
Handicapped 
persons. 
Grants. 
Reports. 
State and local 
governments. 
>. 
"(ii) proposals for such assistance are developed by the re-
{j gional educational laboratories and the research and develop-
ment centers in consultation with the Office; and 
"(iii) the Office determines that the proposed activities will be 
consistent with the education research and development pro-
gram and dissemination activities which are being conducted by 
the Office. 
"(E) No regional educational laboratory or research and develop-
ment center receiving assistance under this subsection shall, by 
reason of the receipt of that assistance, be ineligible to receive any 
other assistance from the Office authorized by law. 
"(F) The Secretary shall make available adequate funds to support 
meritorious, unsolicited proposals as described under subparagraph 
(AXiii), and provide sufficient notice of the availability of such funds 
to individual researchers in all regions of the country. 
"(5) The Secretary, from funds appropriated under this section, 
may establish and maintain research fellowships in the. Office, for 
scholars, researchers, and statisticians engaged in the collection and 
dissemination of information about education and educational re-
search. Subject to regulations published by the Secretary, fellow-
ships may include such stipends and allowance, including travel and 
subsistence expenses provided for under title 5, United States Code, 
as the Secretary considers appropriate. 
"(6) The Secretary may award gremts to institutions of higher 
education, including teclmical and community colleges as appro-
priate, to assess the new and emerging specialties and the tech-
nologies, academic subjects, and occupational areas requiring voca-
tional education, with emphasis on the unique needs for preparing 
an adequate supply of vocational teachers of handicapped students. 
The Secretary shall give special consideration to the preparation 
required to teach classrooms of handicapped, or other highly tar-
geted groups of students, in combination with other nonhandicapped 
or other nontargeted students, within the same vocational education 
setting. 
"(eXD In addition to the other responsibilities of the Office under 
this section, the Office shall carry out, by grant or cooperative 
agreement with a nonprofit educational organization, a National 
Assessment of Educational Progress which shall have as a primary 
purpose the assessment of the performance of children and young 
adults in the basic skills of reading, mathematics, communication, 
and other subjects and skills. Such a National Assessment shall— 
"(A) collect and report at least once every five years data 
assessing the performance of students at various age or grade 
levels in each of the areas of reading, writing, and mathematics; 
*
* 
"(B) report periodically data on changes in knowledge and 
skills of such students over a period of time; 
"(C) conduct special assessments of other educational areas, 
as the need for additionad national information arises; 
,; . 
"(D) include in assessment activities information on special 
groups of individuals; 
"(E) provide technical assistance to State educational agencies 
and to local educational agencies on the use of National Assess-
ment objectives, primarily pertaining to— 
"(i) the basic skills of reading, mathematics, and commu-
nication, and 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1595 
liv.- ' ' 
"(ii) on making comparisons of such assessments with the 
national profile (including special population profiles) and 
change data developed by the National Assessment; and 
"(F) with respect to each State which voluntarily participates 
State and local 
in accordance with paragraph (5), provide a statement of governments. 
information collected by the National Assessment for each such 
State. 
"(2)(A) The organization through which the Office carries out the 
National Assessment shall be responsible for overall management of 
the National Assessment. Such organization shall delegate author-
ity to design and supervise the conduct of the National Assessment 
to an Assessment Policy Committee, established by such organiza-
tion. The Assessment Policy Committee shall be composed of— 
JJ^I 
«.a 
"(i) five members appointed by the organization of whom two 
members shall be representatives of business and industry and 
•; 
three members shall be representatives of the general public; 
.;ii/tia..^^ 
and 
"(ii) fourteen members appointed by the organization from 
the categories of membership specified in subparagraph (B). 
"(B) Members of the Assessment Policy Committee appointed in 
accordance with subparagraph (A)(ii) shall be— 
"(i) one chief State school officer; 
. 
"(ii) two State legislators; 
"(iii) two school district superintendents; 
|. 
"(iv) one member of a State board of education; 
Z 
"(v) one member of a local school board; 
' 
"(vi) one Governor of a State; 
"(vii) four classroom teachers; 
"(viii) one elementary school principal; and 
"(ix) one secondary school principal. 
"(C) The Assistant Secretary shall serve as an ex officio member of 
the Assessment Policy Committee. The Assistant Secretary shall 
also appoint a member of the Council to serve as nonvoting member 
of the Assessment Policy Committee. 
"(D) Members appointed in accordance with subparagraph (A) (i) 
and (ii) shall be appointed for terms for three years on a staggered 
basis. 
"(3) The Assessment Policy Committee established by paragraph 
(2) shall be responsible for the design of the National Assessment, 
including the selection of the learning areas to be assessed, the 
development and selection of goal statements and assessment items, 
the assessment methodology, the form and content of the reporting 
and dissemination of assessment results, and studies to evaluate and 
improve the form and utilization of the National Assessment. The 
appropriateness of all cognitive, background, and attitude items 
developed as part of the National Assessment shall be the respon-
-sibility of the Assessment Policy Committee. Such items shall be 
subject to review by the Department of Education and the Office of 
Management and Budget for a single period of not more than sixty 
davs. 
(4) Each learning area assessment shall have goal statements 
devised through a national consensus approach, providing for active 
participation of teachers, curriculum specialists, subject matter 
specialists, local school administrators, parents, and members of the 
general public. All items selected for use in the assessment shall be 
" 
'"•'' ^ 
reviewed to exclude items which might reflect racial, sex, cultural, 
' " 
or regional bias. 
100 STAT. 1596 
PUBLIC LAW 99-498—OCT. 17, 1986 
Reports. 
Post, p. 1597. 
Contracts. 
State and local 
"(5) Participation in the National Assessment by State and local 
governments. 
education agencies selected as part of a sample of such agencies 
shall be voluntary. 
•Yd 
"(6) The Secretary shall provide for a periodic review of the 
'^' 
National Assessment. This review shall provide an opportunity for 
public comment on the conduct and usefulness of the National 
Assessment and shall result in a report to the Congress, the Presi-
dent, and the Nation on the findings and recommendations, if any, 
of the review. The Secretary shall consider the findings and rec-
ommendations in designing the competition to select the organiza-
tion through which the Office carries out the National Assessment. 
"(f)(1) There are authorized to be appropriated to carry out this 
section and section 406 of this Act, $72,231,000 for fiscal year 1987 
and such sums as may be necessary for each of the four succeeding 
fiscal years. 
"(2) The Secretary may not enter into a contract for the purpose of 
regional educational laboratories under subsection (d)(3)(A)(i) for a 
period in excess of five years. 
"(3) Not less than 95 per centum of funds appropriated pursuant 
to this subsection for any fiscal year shall be expended to carry out 
this section through grants, cooperative agreements, or contracts. 
"(4) When more than one Federal agency uses funds to support a 
single project under this section, the Office may act for all such 
agencies in administering those funds. 
"(g)(1) In each fiscal year for which the total amount appropriated 
to carry out this section and section 406 of this Act equals or exceeds 
the total amount appropriated for fiscal year 1986 to carry out such 
sections 
"(A) not less than $17,760,000 shall be available in each fiscal 
year to carry out subsection (d)(4)(A)(ii) of this section (relating 
to CGntGrs)' 
"(B) not 'less than $17,000,000 shall be available in each fiscal 
*^"'' year to carry out subsection (d)(4)(AXi) of this section (relating to 
labs); 
"(C) not less than $5,700,000 shall be available in each fiscal 
year to assist the education resources information centers 
pursuant to subsection (d)(3XA) of this section; 
"(D) not less than $4,000,000 shall be available in each fiscal 
year to carry out subsection (e) of this section (relating to the 
National Assessment of Educational Progress); 
"(E) not less than $8,750,000 shall be available in each fiscal 
year to carry out section 406 of this Act (relating to the Center 
for Educational Statistics); and 
"(F) not less than $500,000 shall be available in each fiscal 
year to carry out subsection (d)(4XAXiii) of this section (relating 
to field initiated research). 
"(2) If the sums appropriated for any fiscal year are less than the 
amount required to be made available under subparagraphs (A) 
through (F) of paragraph (1), then each of the amounts required to 
be made available under such subparagraphs shall be ratably re-
duced. If additional amounts become available for any such fiscal 
year, such reduced amounts shall be increased on the same basis as 
they were reduced.". 
20 use I22ie 
(b) TRANSITION PROVISIONS.—On the effective date of this title, the 
note. 
property and records of the National Institute of Education shall be 
transferred to the Office of Educational Research and Improvement. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1597 
(c) EMPLOYMENT LIMITATION WAIVER.—Notwithstanding the 3- 
20 use I22ie 
year employment period limitation under section 405(d)(2) of the 
note. 
General Education Provisions Act, the Secretary may continue to 
employ for an indefinite period 3 individuals, selected by the Sec-
retary, who are employed by the Office of Educational Research and 
Improvement on the date of enactment of this Act, were employed 
by such office on April 1, 1986, and were employed by the National 
Institute of Education under its excepted hiring authority imme-
diately prior to employment by such office. 
(d) TECHNICAL AND CONFORMING AMENDMENTS.—Section 401 of 
20 use 3461. 
the Department of Education Organization Act (Public Law 96-88) is 
amended by striking out subsection (c). 
SEC.1402. CENTER FOR EDUCATION STATISTICS. 
r 
^ 
(a) GENERAL AUTHORITY.—(1) Section 406 if the General Education 
Provisions Act is amended— 
20 use 122le-l. 
(A) by striking out subsection (e); and 
(B) by redesignating subsections (f), (g), (h), and (i) as subsec-
tions (e), (f), (g), and (h) respectively. 
(2) The heading of such section is amended to read as follows: 
Jl' 
"CENTER FOR EDUCATION STATISTICS"; 
(3) Section 406(a) of the General Education Provisions Act is 
amended— 
(A) in the first sentence by striking out "Office" and every-
thing that follows through the end thereof, and inserting in lieu 
thereof "Office of Educational Research and Improvement, a 
I 
Center for Education Statistics (hereafter in this section re-
* 
ferred to as the 'Center')."; and 
=
^ 
(B) in the second sentence, by striking out "an Administrator" 
and inserting in lieu thereof "a Director". 
(4) Section 406(b) of the General Education Provisions Act is 
amended— 
' 
(A) in the first sentence by inserting ", and analyze," imme-
c 
diately after "collect"; 
(B) in paragraph (1) by inserting "if feasible, on a State-by-
^ 
State basis," after "(1)"; and 
(C) in paragraph (5) by striking out "Education Division" and 
inserting "Department of Education". 
(5) Section 406(b) of the General Education Provisions Act is 
amended— 
(A) by striking out "and" at the end of paragraph (4); 
k 
(B) by striking out the period at the end of paragraph (5) and 
insert in lieu thereof a semicolon and the word "and"; and 
( 
(C) by adding at the end thereof the following: 
"(6) access periodically the current and projected supply and 
i 
demand for elementary and secondary school teachers (in-
g 
eluding teachers at the pre-school level) and early childhood 
education development personnel with particular attention 
i
^ to— 
, ,..^' 
V 
"(A) long-term and short-term needs for personnel in 
T»3 ^ 
i 
various subject areas or teaching specialities; 
.<>' 
"(B) shortages in particular types of schools or commu-
nities, and in States or regions; 
"(C) the number of minorities entering teaching; 
100 STAT. 1598 
PUBLIC LAW 99-498—OCT. 17, 1986 
a I 
.,-: 
.:^ 
"(D) the proportions of women and minorities in edu-
> •; 
cational administration, and the trends over time; 
"(E) the demographic characteristics, academic qualifica-
tions, job preparation, experience and skills of existing 
teachers and new entrants in the field of education; 
h 
"(F) the effect of the introduction of State mandated 
teacher competency tests on the demographic and edu-
hf' . 
cational characteristics of teachers and the supply of teach-
ers; and 
f t> 
J 
fc 
"(G) the rate at which teachers leave teaching, their 
reasons for leaving, the sources of supply for new entrants, 
and the trends over time.". 
20 use I22ie-i. 
(b) ADVISORY COUNCIL.—Section 406(cX2) of the General Education 
Provisions Act is amended— 
(1) by striking out subparagraph (A); 
i;::.[ D&iJo; 
(2) by redesignating subparagraphs (B), (C), and (D) as sub-
paragraphs (A), (B), and (C), respectively; and 
'«^ 
(3) in subparagraph (A) (as redesignated by paragraph (2)), by 
striking out "Director of the National Institute of Education," 
-81 and inserting "Assistant Secretary,". 
(c) ANNUAL REPORT.—Section 406(d)(1) of the General Education 
Provisions Act is amended by striking out "Assistant Secretary" and 
inserting "Secretary". 
(d) STATISTICAL RECORDS.—Section 406(e) of the General Bklucation 
Provisions Act (as redesignated in subsection (aXD) is amended— 
(1) in paragraph (1)—• 
; ' 
(A) by striking out "(A)"; 
'Q., 
,. 
(B) by striking out the first sentence and inserting "The 
Center is authorized to furnish transcripts or copies of 
.,, f 
tables and other statistical records of the Office and make 
special statistical compilations and surveys for State and 
./. local officials, public and private organizations, and individ-
State and local 
uals. The Center shall provide State and local educational 
governments. 
...f.jjr 
agencies opportunities to suggest the development of 
particular compilations of statistics, surveys, and analyses 
.^' 1-ir that would assist those educational agencies."; 
(C) in the fourth sentence by striking out "Assistant 
.. 
. Secretary" each place it appears and inserting "Secretary"; 
and 
(D) by striking out subparagraph (B); and 
' 
(2) by striking out paragraph (3). 
(e) AUTHORIZATION OF APPROPRIATIONS.—Section 406(f) of the (Jen-
eral Education Provisions Act (as redesignated in subsection (aXD) is 
amended to read as follows: 
"(f) Funds to carry out this section are authorized by section 405(g) 
of this Act.". 
(f) UNIFORM FINANCING DATA.—Section 406(g) of the General 
Education Provisions Act (as redesignated in subsection (aXD) is 
amended to read as follows: 
State and local 
"(g) In addition to its other responsibilities, the C!enter shall 
governments. 
coUect Uniform data from the States on the financing of elementary 
and secondary education. Each State receiving funds under the 
Education Clonsolidation and Improvement Act of 1981 shall co-
operate with the CJenter in this effort.". 
*0*^' 
PUBLIC LAW 99-498—0C5T. 17, 1986 
100 STAT. 1599 
SEC. 1403. USE OF COUNCIL STAFF AND FACILITIES. 
20 USC 
The National Advisory Council on Educational Research and 
Improvement, the Advisory Council on Education Statistics, and 
members of such councils may not use any staff, facilities, equip- 
^':' ''-
ment, supplies, or franking privileges of the councils for activities 
unrelated to the purposes of the councils. 
SEC. 1404. SPECIAL PROJECTS UNDER THE SECRETARY'S DISCRETIONARY 
FUNDS. 
(a) DISCRETIONARY PROGRAMS.—Section 583(aXl) of the Education 
Consolidation and Improvement Act of 1981 is amended by striking 20 USC 3851. 
out ", including" and all that follows before the semicolon. 
(b) PRIORITY FUNDING.—Section 583(b) of the Education Consolida-
tion and Improvement Act of 1981 is amended— 
(1) by striking out "and" after the comma in paragraph (3); 
(2) by inserting "and" after the comma in paragraph (4); 
(3) by adding after paragraph (4) the following: 
"(5) a National Diffusion Network program as described in 
subsection (c),"; 
(4) by striking out "paragraph (4))" and inserting "paragraph 
(4) and not less than 34 percent of funds reserved for the 
purposes of this section in the case of the program referred to in 
paragraph (5))". 
(c) NATIONAL DIFFUSION NETWORK.—Section 583 of the Education 
Consolidation and Improvement Act of 1981 is amended by adding 
the following subsection (c): 
"(c)(1) The National Diffusion Network program under subsection 
(bX5) shall be a national program that recognizes and furthers 
excellence in education by: (A) promoting the awareness and im-
plementation of exemplary educational programs, products, and 
practices to interested elementary, secondary, and postsecondary 
institutions throughout the Nation; and (B) promoting the utiliza-
tion of the knowledge, talents, and services of local staff associated 
with various educational excellence recognition efforts. 
"(2) The program shall be directed toward improving the quality 
of education through the implementation of promising and validated 
innovations and improvements in educational programs, products, 
and practices, and through the provision of training, consultation, 
and related assistance services. 
"(3) In carrying out the program the Secretary shall— 
"(A) acquaint persons responsible for the operation of ele-
mentary, secondary, and postsecondary schools with informa-
tion about exemplary educational programs, products, practices, 
and services; 
"(B) assist them in implementing programs, products, and 
practices, which those persons determine to hold promise for 
improving the quality of education in the schools for which they 
are responsible by providing materials, initial training, and 
ongoing implementation assistance; 
"(C) ensure that all such programs, products, and practices 
are subjected to rigorous evaluation with respect to their 
effectiveness and their capacity for implementation; 
"(D) provide program development assistance toward the rec-
ognition, dissemination, and implementation of promising prac-
tices that hold the potential for answering critical needs and 
that have achieved credibility because of their effective use in 
schools; and 
100 STAT. 1600 
PUBLIC LAW 99-498—OCT. 17, 1986 
Y^',,^ 
"(E) ensure that a substantial percentage of the innovations 
^'"•^'' 
disseminated represent significant changes in practice for 
schools and teachers; 
Grants. 
"(4) For the purpose of carrying out the program the Secretary is 
Contracts. 
authorized to make grants to, and contracts with, local educational 
^nvprifmlntc 
agencles, State educational agencies, institutions of higher edu-
cation, and other public and nonprofit private educational institu-
tions and organizations.". 
governments. 
TITLE XV—AMERICAN INDIAN, ALASKA NATIVE, AND 
: . c ur .
.
> 
NATIVE HAWAIIAN CULTURE AND ART DEVELOPMENT 
20 use 4401 
SEC. 1501. SHORT TITLE. 
This title may be cited as the "American Indian, Alaska Native, 
and Native Hawaiian Culture and Art Development Act". 
20 use 4401. 
SEC. 1502. FINDINGS. 
,: ('' 
The Congress finds that— 
(1) Indian art and culture and Native Hawaiian art and 
culture have contributed greatly to the artistic and cultural 
richness of the Nation; 
(2) Indian art and culture and Native Hawaiian art and 
culture occupy a unique position in American history as being 
our only native art form and cultural heritage; 
(3) the enhancement and preservation of this Nation's native 
art and culture has a fundamental positive influence on the 
American people; 
(4) although the encouragement and support of Indian and 
Native Hawaiian arts and crafts are primarily a matter for 
private, local, and Indian and Native Hawaiian initiative, it is 
also an appropriate matter of concern to the Federal Govern-
ment; 
(5) it is appropriate and necessary for the Federal Govern-
ment to support research and scholarship in Indian art and 
culture and Native Hawaiian art and culture and to com-
plement programs for the advancement of such art and culture 
by tribal, private, and public agencies and organizations; 
(6) current Federal initiatives in the area of Indian art and 
culture and Native Hawaiian art and culture are fragmented 
and inadequate; and 
(7) in order to coordinate the Federal Government's effort to 
preserve, support, revitalize, and disseminate Indian art and 
culture and Native Hawaiian art and culture, it is desirable to 
establish— 
(A) a national Institute of American Indian and Alaska 
Native Culture and Arts Development, and 
'"^ 
(B) a program for Native Hawaiian culture and arts 
development. 
20 use 4402. 
SEC. 1503. DEFINITIONS. 
For the purpose of this title— 
(1) The term "Indian art and culture" includes (but is not 
limited to) the traditional and contemporary expressions of 
Indian language, history, visual and performing arts, and crafts. 
(2) The term "Native Hawaiian art and culture" includes the 
traditional and contemporary expressions of Native Hawaiian 
language, history, visual and performing arts, and crafts. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1601 
(3) The term "Institute" means the Institute of American 
' 
." 
Indian and Alaska Native Culture and Arts Development estab-
lished by this title. 
^ 
(4) The term "Indian" means any person who is a member of 
an Indian tribe. 
(5) The term "Indian tribe" means any tribe, band, nation, or 
other organized group or community of Indians, including any 
Alaska Native village (as defined in, or established pursuant to, 
the Alaska Native Claims Settlement Act), which is recognized 
43 use leoi 
as eligible for special programs and services provided by the note. 
United States to Indisuis because of their status as Indians. 
(6) The term "Native Hawaiian" means any descendent of a 
person who, prior to 1778, was a native of the Hawaiian Islands. 
(7) The term "Secretary" means the Secretary of the Interior. 
(8) The term "Board" means the Board of Trustees of the 
Institute established under this title. 
PART A—AMERICAN INDIANS AND ALASKA NATIVES 
SEC. 1504. ESTABLISHMENT OF INSTITUTE. 
20 USC 4411 
(a) IN GENERAL.—There is hereby established a corporation to be 
known as the "Institute of American Indian and Alaska Native 
Culture and Arts Development", which shall be under the direction 
and control of a Board of Trustees ^tablished under section 1505. 
(b) SUCCESSION AND AMENDBIENT OP CHARTER.—The corporation 
established under subsection (a) shall have succession until dissolved 
by Act of Congress. Only the Congress shall have the authority to 
revise or amend the charter of such corporation. 
SEC. 1505. BOARD OF TRUSTEES. 
20 USC 4412. 
(a) COMPOSITION.— 
(1) The Board of Trustees of the Institute shall be composed of 
13 voting members and 6 nonvoting members as follows: 
(A) The voting members shaU be appointed by the Presi-
dent of the United States by and with the advice and 
consent of the Senate, not later than 180 days after the date 
of enactment of this Act, from among individuals from 
private life who are Indians, or other individuals, widely 
recognized in the field of Indian art and culture and who 
represent diverse political views. 
(B) The nonvoting members shall consist o
f
— 
i 
(i) 2 Members of the House of Representatives ap-
: 
' 
pointed by the Speaker of the House of Representatives 
in consultation with the Minority Leader of the House 
of Representatives; 
(ii) 2 Members of the Senate appointed by the Presi-
dent pro tempore of the Senate, upon the recommenda-
tion of the Msgority Leader and the Minority Leader of 
. r 
the Senate; 
(iii) the President of the Institute, ex officio; and 
(iv) the president of the student body of the Institute, 
ex officio. 
(2) In making appointments pursuant to paragraph (IXA), the 
President of the United States shall— 
President of U.S. 
(A) consult with the Indian tribes and the various 
organizations of Indians; 
. . ;.. 
100 STAT. 1602 
PUBLIC LAW 99-498—OCT. 17, 1986 
Federal 
(B) publish in the Federal Register an announcement of 
Register, 
t;he expiration of terms no less than 4 months before such 
publication. 
expiration; 
'Q " 
(C) solicit nominations from Indian tribes and various 
Indian organizations to fill the vacancies; 
(D) give due consideration to the appointment of individ-
uals who will provide appropriate regional and tribal rep-
resentation on the Board; and 
'''^' ' ' 
(E) ensure that a majority of the Board appointed under 
paragraph (1)(A) are Indians. 
(3) Members of Congress appointed under this section, or their 
designees, shall be entitled to attend all meetings of the Board 
and to provide advice to the Board on any matter relating to the 
Institute. 
(b) TERMS OF OFFICE.— 
(1) Except as otherwise provided in this section, members 
shall be appointed for terms of office of 6 years. 
(2) The terms of office on the Board for the Members of the 
House of Representatives and of the Senate shall expire at the 
"""*' 
end of the congressional term of office during which such 
Member or Senator was appointed to the Board. 
(3) Of the members of the Board first appointed under subsec-
tion (a)(1)(A)— 
(A) 4 shall be appointed for terms of office of 2 years; 
(B) 4 shall be appointed for terms of office of 4 years; and 
(C) 5 shall be appointed for terms of office of 6 years, 
as determined by the drawing of lots during the first meeting of 
the Board. 
^ 
(4) No member of the Board appointed under subsection 
(a)(lXA) shall be eligible to serve in excess of 2 consecutive 
terms, but may continue to serve until such member's successor 
is appointed. 
(c) VACANCIES.—Any member of the Board appointed under 
subsection (a) to fill a vacancy occurring before the expiration of the 
term to which such member's predecessor was appointed shall be 
appointed for the remainder of such term. If the vacancy occurs 
prior to the expiration of the term of a member of the Board 
appointed under subsection (a)(lXB), a replacement shall be ap-
pointed in the same manner in which the original appointment was 
made. 
(d) REMOVAL.—No member of the Board may be removed during 
the term of office of such member except for just and sufficient 
cause. 
(e) CHAIRMAN AND VICE CHAIRMAN.—The President of the United 
States shall designate the initial Chairman and Vice Chairman of 
the Board from among the members of the Board appointed pursu-
ant to subsection (a)(1)(A). Such Chairman and Vice Chairman so 
designated shall serve for 12 calendar months. Thereafter, the 
Chairman and Vice Chairman shall be elected from among the 
members of the Board appointed pursuant to subsection (a)(lXA) and 
shall serve for terms of 2 years. In the case of a vacancy in the office 
of Chairman or Vice Chairman, such vacancy shall be filled by the 
.,.'J 5 :.- 1, 
members of the Board appointed pursuant to subsection (aXl)(A), 
and the member filling such vacancy shall serve for the remainder 
of the unexpired term. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1603 
(f) QUORUM.—Unless otherwise provided by the bylaws of the 
Institute, a majority of the members appointed under subsection 
(a)(1)(A) shall constitute a quorum. 
(g) POWERS.—The Board is authorized— 
(1) to formulate the policy of the Institute; 
(2) to direct the management of the Institute; and 
(3) to make such bylaws and rules as it deems necessary for 
the administration of its functions under this title, including 
the organization and procedures of the Board. 
(h) COMPENSATION.—Members of the Board appointed pursuant to 
subsection (a)(1)(A) shall, for each day they are engaged in the 
performance of the duties under this title, receive compensation at 
the rate of $125 per day, including traveltime. All members of the 
Board, while so serving away from their homes or regular places of 
business, shall be allowed travel expenses (including per diem in lieu 
of subsistence), as authorized by section 5703 of title 5, United States 
Code, for persons in Government service employed intermittently. 
(i) REVIEW BY THE SECRETARY OP THE INTERIOR.—For so long as any 
employee of the Institute is covered under title 5, United States 
Code, the Board (acting by majority vote) shall submit final decisions 
relating to personnel to the Secretaiy of the Interior. Each such 
decision shall become final 30 days after the date of its receipt by 
the Secretary unless the Secretary disapproves of such decision. The 
Secretary may only disapprove a decision of the Board for just cause. 
SEC. 1506. EXECUTIVE BOARD. 
20 USC 4413. 
(a) COMPOSITION.—The Board shall have an Executive Board com-
posed of— 
(1) the chairman of the Board; 
(2) the vice chairman of the Board; 
(3) the secretary of the Board; 
(4) the treasurer of the Board; and 
(5) an at-large member of the Board elected by the Board at 
its initial meeting. 
(b) VACANCIES.—In the case of any vacancy which occurs in the 
position of at-large member before the expiration of such member's 
term, the Board shall elect a replacement to complete that term. 
(c) MEETINGS.—The Executive Board shall hold not more than 4 
regular meetings per calendar year. Special meetings may be held 
upon the call of the chairman or 3 members of the Executive Board. 
(d) QUORUM.—A majority of the Executive Board shall constitute a 
quorum. 
(e) POWERS.—The Executive Board may hold and use all the 
powers of the Board, subject to the approval of the Board. 
SEC. 1507. GENERAL POWERS OF THE BOARD. 
20 USC 4414. 
In carrying out the provisions of this title, the Board shall have 
the power, consistent with the provisions of this title— 
(1) to adopt, use, and alter a corporate seal; 
(2) to make agreements and contracts with persons, Indian 
tribes, and private or governmental entities and to make pay-
ments or advance payments under such agreements or contracts 
without regard to section 3324 of title 31, United States C!ode; 
(3) to sue and be sued in its corporate name and to complain 
and defend in any court of competent jurisdiction; 
J 
(4) to represent itself, or to contract for representation, in all 
a 
judicial, legal, and other proceedings; 
100 STAT. 1604 
PUBLIC LAW 99-498—OCT. 17, 1986 
Grants. 
Contracts. 
OSU ifi 
20 use 4415. 
5 use 5332. 
20 u s e 4416. 
'. 
(5) with the approval of the agency concerned, to make use of 
« i services, facilities, and property of any board, commission, 
independent establishment, or executive agency or department 
of the executive branch in carrying out the provisions of this 
title and to pay for such use (such payments to be credited to 
the applicable appropriation that incurred the expense); 
lift 
(6) to use the United States mails on the same terms and 
v
y conditions as the executive departments of the United States 
Government; 
(7) to obtain the services of experts and consultants in accord-
ance with the provisions of section 3109 of title 5, United States 
Code, and to accept and utilize the services of voluntary and 
noncompensated personnel and reimburse them for travel ex-
penses, including per diem, as authorized by section 5703 of title 
5, United States Code; 
(8) to solicit, accept, and dispose of gifts, bequests, devises of 
\ 
money, securities, and other properties of whatever character, 
for the benefit of the Institute; 
(9) to receive grants from, and enter into contracts and other 
arrangements with. Federal, State, or local governments, public 
and private agencies, organizations, institutions, and individ-
uals; 
(10) to acquire, hold, maintain, use, operate, and dispose of 
such real property, including improvements thereon, personal 
property, equipment, and other items, as may be necessary to 
enable the Board to carry out the purpose of this title; 
-lit. (11) to obtain insurance or make other provisions against 
losses; 
(12) to use any funds or property received by the Institute to 
carry out the purpose of this title; and 
(13) to exercise all other lawful powers necessarily or reason-
ably related to the establishment of the Institute in order to 
5
B carry out the provisions of this title and the exercise of the 
powers, purposes, functions, duties, and authorized activities of 
the Institute. 
SEC. 1508. PRESIDENT OF THE INSTITUTE. 
(a) APPOINTMENT.—The Institute shall have a President who shall 
be appointed by the Board. The President of the Institute shall serve 
as the chief executive officer of the Institute. Subject to the direction 
of the Board and the general supervision of the Chairman of the 
Board, the President of the Institute shall have the responsibility for 
carrying out the policies and functions of the Institute and shall 
have authority over all personnel and activities of the Institute. 
(b) COMPENSATION.—The President of the Institute shall be paid at 
a rate not to exceed the maximum rate of basic pay payable for 
grade GS-18 of the General Schedule. 
SEC. 1509. STAFF OF INSTITUTE. 
(a) EXEMPTION FROM CIVIL SERVICE,—Except as otherwise pro-
vided in this section, title 5, United States Code, shall not apply to 
the Institute. 
(b) APPOINTMENT AND COMPENSATION.— 
nt 
(1) The President of the Institute, with the approval of the 
Board, shall have the authority to appoint, fix the compensation 
lif of (including health and retirement benefits), and prescribe the 
duties of, such officers and employees as the President of the 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1605 
Institute deems necessary for the efficient administration of the 
Institute. 
(2) The President of the Institute shall fix the basic compensa-
tion for officers and employees of the Institute at rates com-
parable to the rates in effect under the General Schedule for 5 USC 5332. 
individuals with comparable qualifications, and holding com-
parable positions, to whom chapter 51 of title 5, United States 
Code, applies. 
5 USC 5101 
(3)(A) Not later than 180 days after the President of the «*««9. 
Institute is appointed, the President of the Institute shall make 
policies and procedures governing— 
(i) the establishment of positions at the Institute, 
(ii) basic compensation for such positions (including 
•> 
health and retirement benefits), 
(iii) entitlement to compensation, 
m-ii: 
(iv) conditions of employment, 
(v) discharge from employment, 
^ 
(vi) the leave system, and 
(vii) such other matters as may be appropriate. 
(B) Rules and regulations promulgated with respect to dis-
charge and conditions of employment shall require— 
(i) that procedures be established for the rapid and equi-
table resolution of grievances of such individuals; and 
(ii) that no individual may be discharged without notice 
of the reasons therefor and an opportunity for a hearing 
under procedures that comport with the requirements of 
*
^ 
due process. 
(c) APPEAL TO BOARD.—Any officer or employee of the Institute 
,i'.. 
may appeal to the Board any determination by the President of the 
Institute to not re-employ or to discharge such officer or employee. 
Upon appeal, the Board may, in writing, overturn the determination 
of the President of the Institute with respect to the employment of 
such officer or employee. 
(d) No REDUCTION IN CLASSIFICATION OR COMPENSATION.—Individ-
uals who elect to remain civil service employees shall be transferred 
in accordance with applicable laws and regulations relating to the 
transfer of functions and personnel, except that any such transfer 
shall not result in a reduction in classification or compensation with 
respect to any such individual for at least one year after the date on 
which such transfer occurs. 
(e) LEAVE.— 
(1) Any individual who— 
(A) elects under subsection (g) to be covered under the 
provisions of this section, or 
• 
(B) is an employee of the Federal Government and is 
transferred or reappointed, without a break in service, from 
' 
a position under a different leave system to the Institute, 
shall be credited for purposes of the leave system provided 
under rules and regulations promulgated pursuant to subsec-
tion (b), with the annual and sick leave to the credit of such 
individual immediately before the effective date of such elec-
tion, transfer, or reappointment. 
(2) Upon termination of employment with the Institute, any 
annual leave remaining to the credit of an individual within the 
purview of this section shall be liquidated in accordance with 
sections 5551(a) and 6306 of title 5, United States Code, except 
that leave earned or accrued under rules and regulations 
100 STAT. 1606 
PUBLIC LAW 99-498—OCT. 17, 1986 
promulgated pursuant to subsection (b) shall not be so liq-
uidated. 
(3) In the case of any individual who is transferred, promoted, 
or reappointed, without break in service, to a position in the 
" 
, 
Federal Government under a different leave system, any 
remaining leave to the credit of such person earned or credited 
under the rules and regulations promulgated pursuant to 
subsection (b) shall be transferred to the credit of such individ-
ual in the employing agency on an adjusted basis in accordance 
with the rules and regulations which shall be promulgated by 
the Office of Personnel Management. 
(f) APPLICABILITY.—This section shall apply to any individual ap-
pointed after the date of enactment of this title for employment in 
the Institute. Except as provided in subsections (d) and (g), the 
enactment of this title shall not affect— 
(1) the continued emplo5anent of any individual employed 
immediately before the date of enactment of this title, or 
(2) such individual's right to receive the compensation at-
tached to such position. 
(g) TERMINATION OF CIVIL SERVICE POSITIONS.— 
(1) At the end of the 2-year period beginning on the date 
referred to in section 1514(f), any position at the Institute which 
is occupied by an individual in the civil service shall terminate. 
During such period, such individual may make an irrevocable 
election to be covered under the provisions of this section, 
except that any such individual who is subject to subchapter III 
5 use 8331 
of chapter 83 of title 5, United States Code, may elect to 
A *
f
^ 516 
continue to be subject to such subchapter, and any such individ-
" ^' ^' 
ual who is subject to chapter 84 of such title may elect to 
continue to be subject to such chapter. 
(2) Any individual who makes an election under paragraph (1) 
to continue to be subject to subchapter III of chapter 83 of title 
5, United States Code, or chapter 84 of such title shall, so long 
as continually employed by the Institute without a break in 
service subject to such subchapter or such chapter 84, as the 
case may be, continue to be treated as an employee subject to 
such subchapter or such chapter 84, as the case may be. Employ-
ment by the Institute without a break of continuity in service 
shall be considered to be employment by the United States 
Government for the purpose of such subchapter or such chapter 
84, as the case may be. The Institute shall be responsible for 
making the contributions required to be made by an employing 
agency under such subchapter or such chapter 84, £is the case 
may be. 
(h) COLLECTIVE BARGAINING.—The Institute shall be considered an 
5 use 7101 
agency for the purpose of chapter 71 of title 5, United States Code. 
^* ^^^- 
(i) WORKMEN s COMPENSATION.—Employees of the Institute shall 
receive compensation for work injuries and illnesses in accordance 
5 use 8101 
with chapter 81 of title 5, United States Code. 
et seq. 
20USe4417. 
SEC.1510. FUNCTIONS OF THE INSTITUTE. 
(a) PRIMARY FUNCTIONS.—The primary functions of the Institute 
shall be— 
(1) to provide scholarly study of, and instruction in, Indian art 
and culture, and 
(2) to establish programs which culminate in the awarding of 
degrees in the various fields of Indian art and culture. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1607 
(b) ESTABLISHMENTS WITHIN INSTITUTE.—There shall be estab-
lished within the Institute— 
(1) a Center for Culture and Art Studies to be administered by 
a director (appointed by the President of the Institute, with the 
approval of the Board), which shall include (but not be limited 
to) Departments of Arts and Sciences, Visual Arts, Performing 
Arts, Language, Literature, and Museology; and 
'^* 
*
-
(2) a Center for Research and Cultural Exchange, adminis-
tered by a director (appointed by the President of the Institute, 
with the approval of the Board), which shall include— 
v.; i 
(A) a museum of Indian arts; 
(B) a learning resources center; 
(C) programs of institutional support and development; 
(D) research programs; 
(E) fellowship programs; 
(F) seminars; 
(G) publications; 
(H) scholar-in-residence and artist-in-residence programs; 
and 
(I) inter-institutional programs of cooperation at national 
and international levels. 
(c) OTHER PROGRAMS.—In addition to the centers and programs 
described in subsection (b), the Institute shall develop such pro-
grams and centers as the Board determines are necessary to— 
(1) foster research and scholarship in Indian art and culture 
through— 
(A) resident programs; 
(B) cooperative programs; and 
>. 
(Q grant programs; 
(2) complement existing tribal programs for the advancement 
of Indian art and culture; and 
(3) coordinate efforts to preserve, support, revitalize, and 
develop evolving forms of Indian art and culture. 
SEC. 1511. INDIAN PREFERENCE. 
20 USC 4418. 
(a) IN GENERAL.—Notwithstanding any other provision of Federal Contracts. 
or State law, the Institute is authorized to extend preference to Grants. 
Indians in— 
(1) admissions to, and enrollment in, programs conducted by 
the Institute, 
(2) employment by the Institute, and 
(3) contracts, fellowships, and grants awarded by the In-
stitute. 
(b) HIRING PREFERENCE.—In carrying out section 1509(b)(1), the 
President of the Institute shall, to the maximum extent practicable, 
give preference in hiring to Indians. 
SEC. 1512. NONPROFIT AND NONPOLITICAL NATURE OF THE INSTITUTE. 20 USC 4419. 
(a) STOCK.—The Institute shall have no power to issue any shares 
of stock or to declare or pay any dividends. 
(b) NONPROFIT NATURE.—No part of the income or assets of the 
Institute shall inure to the benefit of any director, officer, employee, 
or any other individual except as salary or reasonable compensation 
for services. 
(c) NoNPOLiTiCAL NATURE.—The Institute may not contribute to, 
or otherwise support, any political party or candidate for elective 
public office. 
100 STAT. 1608 
PUBLIC LAW 99-498—OCT. 17, 1986 
20 u s e 4420. 
SEC. 1513. TAX STATUS. 
_ -x^riv-tr^^. - r v,, .{^v-x -
• • /--WVAM:^^.m AT«5T 
id) 
The Institute and the franchise, capital, reserves, income, and 
property of the Institute shall be exempt from all taxation now or 
hereafter imposed by the United States, by any Indian tribe, or by 
any State or political subdivision thereof. 
20 u s e 4421. 
SEC. 1514. TRANSFER OF FUNCTIONS. 
(a) INSTITUTE OF AMERICAN INDIAN ARTS.—There are hereby trans-
ferred to the Institute of American Indian and Alaska Native 
Culture and Art Development, and such Institute shall perform, the 
functions of the Institute of American Indian Arts established by 
the Secretary in 1962. 
(b) CERTAIN MATTERS RELATING TO TRANSFERRED FUNCTIONS.— 
(1) All personnel, liabilities, contracts, real property (includ-
ing the collections of the museum located on the site known as 
the "Santa Fe Indian School" but not the museum building), 
personal property, assets, and records £is are determined by the 
Director of the Office of Management and Budget to be em-
ployed, held, or used primarily in connection with any function 
transferred under the provisions of this title (regardless of the 
administrative entity providing the services on the date before 
the transfer) shall be transferred to the Institute. 
(2) Personnel engaged in functions transferred by this title 
shall be transferred in accordance with applicable laws and 
regulations relating to the transfer of functions, except that 
such transfer shall be without reduction in classification or 
compensation for one year after such transfer. 
(c) REFERENCES IN OTHER LAWS.—All laws and regulations relat-
ing to the Institute of American Indian Arts established by the 
Secretary in 1962 shall, insofar as such laws and regulations are 
appropriate, and not inconsistent with the provisions of this title, 
remain in full force and effect and apply with respect to the 
:„ -, 
Institute. All references in any other Federal law to the Institute of 
American Indian Arts, or any officer transferred to the Institute of 
'• 
American Indian and Alaska Native Culture and Arts Development 
under subsection (b), shall be deemed to refer to the Institute of 
American Indian and Alaska Native Culture and Arts Development 
or an officer of the Institute of American Indian and Alaska Native 
Culture and Arts Development. 
(d) TECHNICAL AND SUPPORT ASSISTANCE.—During the 2-year 
period beginning on the date referred to in subsection (f), the 
Secretary of the Interior shall provide such technical and support 
assistance to the Institute as the Secretary determines reasonable or 
necessary to assist the Institute. Such assistance shall include audit, 
accounting, computer services, and building and maintenance serv-
Mm 3Si- 
ices. 
(e) ADVISORY BOARD.—During the period beginning on the date of 
enactment of this title and ending on the date referred to in 
subsection (f), the Advisory Board for Institute of American Indian 
Arts shall continue to act in £in advisory role for the Board and the 
Institute of American Indian and Alaska Native Culture and Arts 
Development. 
(f) EFFECTIVE DATE.—The provisions of this section (other than 
subsection (e)) shall take effect on October 1,1986. 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1609 
SEC. 1515. REPORTS. 
20 USC 4422. 
(a) ANNUAL REPORT.—The President of the Institute shall submit 
an annual report to the Congress and to the Board concerning the 
status of the Institute during the 12 calendar months preceding the 
date of the report. Such report shall include, among other matters, a 
detailed statement of all private and public funds, gifts, and other 
items of a monetary value received by the Institute during such 12-
month period and the disposition thereof as well as any rec-
ommendations for improving the Institute. 
(b) BUDGET PROPOSAL.— 
(1) During the 2-year period beginning on the date referred to 
in section 1514(f), the Board shall submit a budget proposal to 
/ 
the Secretary of the Interior. The Secretary shall submit that 
* 
proposal to the Congress. 
t 
(2) After the period described in paragraph (1) and for each 
fiscal year thereafter, the Board shall submit a budget proposal 
r 
to the Congress. 
(3) A budget proposal under this subsection shall be submitted 
1 
not later than April 1 of each calendar year and shall propose a 
budget for the Institute for the 2 fiscal years succeeding the 
e 
fiscal year during which such proposal is submitted. 
i 
(4) In determining the amount of funds to be appropriated to 
the Institute on the basis of such proposals, the Congress shall 
not consider the amount of private fundraising or bequests 
made on behalf of the Institute during any preceding fiscal year. 
SEC. 1516. HEADQUARTERS. 
State and local 
The site of the Institute of American Indian Arts, at Santa Fe, 2o\jSC 4423. 
New Mexico, shall be maintained as the location for the Institute of 
Indian and Alaska Native Culture and Arts Development. To facili-
tate this action and the continuity of programs being provided at the 
Institute of American Indian Arts, the Secretary may enter into 
negotiations with State and local governments for such exchanges or 
transfers of lands and such other assistance as may be required. 
SEC. 1517. COMPLIANCE WITH OTHER ACTS. 
20 USC 4424. 
(a) IN GENERAL,—The Institute shall comply with the provisions 
of-
(1) Public Law 95-341 (42 U.S.C. 1996), popularly known as 
^ 
the American Indian Religious Freedom Act, 
j 
(2) the Archeological Resources Protection Act of 1979 (16 
^ 
U.S.C. 470aa et seq.), and 
^ 
(3) the National Historic Preservation Act (16 U.S.C. 470 et 
seq.). 
(b) CRIMINAL LAWS.—All Federal criminal laws relating to lar-
ceny, embezzlement, or conversion of the funds or the property of 
the United States shall apply to the funds and property of the 
Institute. 
SEC. 1518. ENDOWMENT PROGRAM. 
20 USC 4425. 
(a) ESTABUSHMENT.— 
> 
,, 
(1) From the amount appropriated pursuant to section 1521(a), 
I 
the Secretary shall make available to the Institute not more 
than $500,000 which shall be deposited into a trust fund main-
j: 
tained by the Institute at a federally insured banking or savings 
institution. 
100 STAT. 1610 
PUBLIC LAW 99-498—OCT. 17, 1986 
• • 
; , >
: 
(2) The President of the Institute shall provide for the deposit 
into the trust fund described in paragraph (1)— 
(A) of a capital contribution by the Institute in an amount 
^^^, 
equal to the amount of each Federal contribution; and 
(B) any earnings on the funds deposited under paragraph 
(1) or subparagraph (A). 
(3) Funds in the trust fund described in paragraph (1) shall be 
, invested in a manner as to insure the accumulation of interest 
thereon at a rate not less than that generally available for 
similar funds deposited at the same banking or savings institu-
tion for the same period or periods of time. 
(4) If at any time the Institute withdraws any capital con-
tribution made by the Institute to the trust fund described in 
paragraph (1), an equal amount of Federal capital contribution 
shall be withdrawn from such trust fund and returned to the 
Treasury as miscellaneous receipts. 
(5) No part of the net earnings of the trust fund described in 
' V paragraph (1) shall inure to the benefit of any private person. 
(6) The President of the Institute shall provide for such other 
provisions governing the trust fund described in paragraph (1) 
as may be necessary to protect the financial interest of the 
United States and to promote the purpose of this title as are 
agreed to by the Secretary and the Institute, including record-
keeping procedures for the expenditure of accumulated interest 
which allow the Secretary to audit and monitor programs and 
activities conducted with such interest. 
(b) USE OF FUNDS.—Interest deposited pursueuit to subsection 
•i-' £ - >
^ (a)(2)(B) in the trust fund described in subsection (aXD may be 
periodically withdrawn and used, at the discretion of the Institute, 
to defray any expenses associated with the operation of the In-
stitute, including expense of operations and maintenance, adminis-
tration, academic and support personnel, community and student 
services programs, and technical assistance. 
(c) CoMPUANCE WITH MATCHING REQUIREMENT.—For the purpose 
; 41 ^ of complying with the contribution requirement of subsection 
(a)(2XA), the Institute may use funds which are available from any 
private or tribal source. 
(d) ALLOCATION OF FUNDS.—From the amount appropriated pursu-
ant to section 1521(a), the Secretary shall allocate to the Institute an 
amount for a Federal capital contribution equal to the amount 
which the Institute demonstrates has been placed within the control 
of, or irrevocably committed to the use of, the Institute and is 
available for deposit as a capital contribution of that Institute in 
accordance with subsection (a). 
PART B—NATIVE HAWAIIANS 
20 u s e 4441. 
SEC. 1521. PROGRAM FOR NATIVE HAWAIIAN CULTURE AND ARTS DEVEL-
OPMENT. 
(a) IN GENERAL.—The Secretary of the Interior is authorized to 
make grants for the purpose of supporting a program for Native 
Hawaiian culture and arts development to any private, nonprofit 
organization or institution which— 
(1) primarily serves and represents Native Hawaiians, and 
PUBLIC LAW 99-498—OCT. 17, 1986 
100 STAT. 1611 
(2) has been recognized by the Governor of the State of Hawaii 
for the purpose of making such organization or institution 
eligible to receive such grants. 
(b) PURPOSE OF GRANTS.—Grants made under subsection (a) shall, 
to the extent deemed possible by the Secretary and the recipient of 
the grant, be used— 
(1) to provide scholarly study of, and instruction in. Native 
Hawaiian art and culture, 
(2) to establish programs which culminate in the awarding of 
degrees in the various fields of Native Hawaiian art and cul-
ture, or 
(3) to establish centers and programs with respect to Native 
Hawaiian art and culture that are similar in purpose to the 
centers and programs described in subsections (b) and (c) of 
section 1510. 
(c) MANAGEMENT OF GRANTS.— 
(1) Any organization or institution which is the recipient of a 
grant made under subsection (a) shall establish a governing 
board to manage and control the program with respect to which 
such grant is made. 
(2) The members of the governing board which is required to 
be established under paragraph (1) shall— 
(A) be Native Hawaiians or individuals widely recognized 
in the field of Native Hawaiian art and culture, 
(B) include a representative of the Office of Hawaiian 
Affairs of the State of Hawaii, 
(C) include the president of the University of Hawaii, 
(D) include the president of the Bishop Museum, and 
(E) shall serve for a fixed term of office. 
SEC. 1522. ADMINISTRATIVE PROVISIONS. 
Grants. 
(a) PAYMENTS.—The Secretary may award grants under this part 
in installments, in advance, or by way of reimbursement and may 
make necessary adjustments in payments of grants on account of 
overpayments or underpajrments. 
(b) RECOVERY OF OVERPAYMENTS.— 
(1) If the Secretary or a court of competent jurisdiction finds 
that— 
(A) any person— 
(i) has— 
(I) made, or has caused to be made by another, a 
false statement or representation of a material fact 
knowing it to be false, or 
(II) knowingly failed, or caused another to fail, to 
disclose a material fact; and 
(ii) as a result of such action, has received any funds 
under this part which such person would not have 
otherwise received, or 
(B) any person misappropriates any funds paid by the 
Secretary under this part, 
such person shall be liable to repay the amount of such funds to 
the United States. Any such finding by the Secretary may be 
made only after an opportunity for a fair hearing. 
(2) Any amount repaid under this subsection shall be returned 
to the general fund of the Treasury of the United States. 
(c) PENALTIES.—Whoever— 
(1) makes a false statement of a material fact knowing it to be 
false, or knowingly fails to disclose a material fact, for the 
100 STAT. 1612 
PUBLIC LAW 99-498—OCT. 17, 1986 
purpose of obtaining or increasing for such person or for any 
other person any payment of funds provided under this part, or 
(2) misappropriates any funds provided under this part, 
shall be fined not more than $1,000 or imprisoned for not more than 
one year, or both. 
" '*-* 
PART C—AUTHORIZATION OF APPROPRIATIONS 
20 u s e 4451. 
SEC. 1531. AUTHORIZATION OF APPROPRIATIONS. 
(a) PART A.—There are authorized to be appropriated for the 
purpose of carrying out the provisions of part A of this title— 
(1) for fiscal year 1987, $4,000,000, and 
(2) for each succeeding fiscal year, such sums as may be 
necessary to carry out such provisions. 
OD) PART B.—There are authorized to be appropriated for the 
purpose of carrying out the provisions of part B of this title— 
(1) for fiscal year 1987, $1,000,000, and 
(2) for each succeeding fiscal year, such sums as may be 
necessary to carry out such provisions. 
TITLE XVI—UNITED STATES INSTITUTE OF PEACE 
SEC. 1601. AUTHORIZATIONS OF APPROPRIATIONS. 
(a) AUTHORIZATIONS OF APPROPRIATIONS.—(1) The first sentence of 
section 1710(a) of the United States Institute of Peace Act (22 U.S.C. 
4609(a)) is amended— 
(A) by striking out "fiscal year 1985" and inserting in lieu 
thereof "fiscal year 1987"; and 
(B) by striking out "fiscal year 1986" and inserting in lieu 
thereof "fiscal year 1988". 
22 use 4609 
(2) The amendments made by paragraph (1) shall take effect on 
note. 
October 1,1986. 
Ot)) AvAiLABiuTY OF FuNDS.—The second sentence of section 
1710(a) of such Act (22 U.S.C. 4609(a)) is amended to read as follows: 
"Amounts appropriated under this section are authorized to remain 
available to the Institute until expended.". 
Approved October 17,1986. 
y \ 
LEGISLATIVE HISTORY—S. 1965 (H.R. 3700) (H.R. 2246): 
HOUSE REPORTS: No. 99-383 accompanying H.R. 3700 and No. 99-589 accompany-
ing H.R. 2246 (both from Comm. on Education and Labor) and No. 
99-861 (Comm. of Conference). 
SENATE REPORTS: No. 99-296 (Comm. on Labor and Human Resources). 
CONGRESSIONAL RECORD: 
Vol. 131 (1985): Dec. 3, 4, H.R. 3700 considered and passed House. 
Vol. 132 (1986): May 13, H.R. 2246 considered and passed House. 
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June 2, 3, S. 1965 considered and passed Senate. 
June 17, considered and passed House, amended, in lieu of H.R. 
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3700 and H.R. 2246. 
Sept. 24, House agreed to conference report. 
Sept. 25, Senate agreed to conference report. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 22 (1986): 
Oct. 17, Presidential statement.