 
      CHAPTER 28--HIGHER EDUCATION RESOURCES AND STUDENT ASSISTANCE
 
                    SUBCHAPTER IV--STUDENT ASSISTANCE
 
              Part B--Federal Family Education Loan Program
 
Sec. 1075. Limitations on individual federally insured loans and 
        on Federal loan insurance
        

(a) Annual and aggregate limits

                          (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) in the case of a student at an eligible institution who 
        has not successfully completed the first year of a program of 
        undergraduate education--
                (I) $2,625, if such student is enrolled in a program 
            whose length is at least one academic year in length (as 
            determined under section 1088 of this title); and
                (II) if such student is enrolled in a program of 
            undergraduate education which is less than one academic 
            year, the maximum annual loan amount that such student may 
            receive may not exceed the amount that bears the same ratio 
            to the amount specified in subclause (I) as the length of 
            such program measured in semester, trimester, quarter, or 
            clock hours bears to one academic year;

            (ii) in the case of a student at an eligible institution who 
        has successfully completed such first year but has not 
        successfully completed the remainder of a program of 
        undergraduate education--
                (I) $3,500; or
                (II) if such student is enrolled in a program of 
            undergraduate education, the remainder of which is less than 
            one academic year, the maximum annual loan amount that such 
            student may receive may not exceed the amount that bears the 
            same ratio to the amount specified in subclause (I) as such 
            remainder measured in semester, trimester, quarter, or clock 
            hours bears to one academic year;

            (iii) in the case of a student at an eligible institution 
        who has successfully completed the first and second years of a 
        program of undergraduate education but has not successfully 
        completed the remainder of such program--
                (I) $5,500; or
                (II) if such student is enrolled in a program of 
            undergraduate education, the remainder of which is less than 
            one academic year, the maximum annual loan amount that such 
            student may receive may not exceed the amount that bears the 
            same ratio to the amount specified in subclause (I) as such 
            remainder measured in semester, trimester, quarter, or clock 
            hours bears to one academic year; and

            (iv) in the case of a graduate or professional student (as 
        defined in regulations of the Secretary) at an eligible 
        institution, $8,500.

        (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.
        (C) For the purpose of subparagraph (A), the number of years 
    that a student has completed in a program of undergraduate education 
    shall include any prior enrollment in an eligible program of 
    undergraduate education for which the student was awarded an 
    associate or baccalaureate degree, if such degree is required by the 
    institution for admission to the program in which the student is 
    enrolled.

                        (2) Aggregate limits

        (A) The aggregate insured unpaid principal amount for all such 
    insured loans made to any student shall not at any time exceed--
            (i) $23,000, in the case of any student who has not 
        successfully completed a program of undergraduate education, 
        excluding loans made under section 1078-1 \1\ or 1078-2 of this 
        title; and
---------------------------------------------------------------------------
    \1\ See References in Text note below.
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            (ii) $65,500, in the case of any graduate or professional 
        student (as defined by regulations of the Secretary) and (I) 
        including any loans which are insured by the Secretary under 
        this section, or by a guaranty agency, made to such student 
        before the student became a graduate or professional 
        student),\2\ but (II) excluding loans made under section 1078-1 
        \1\ or 1078-2 of this title,
---------------------------------------------------------------------------
    \2\ So in original. There is no opening parenthesis.

    except that the Secretary may increase the limit applicable to 
    students who are pursuing programs which the Secretary determines 
    are exceptionally expensive.
        (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 1080 of this title by the Secretary to any 
        eligible lender as described in section 1085(d)(1)(D) of this 
        title 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 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 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 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 1085(d)(1)(D) of this title 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 1085(d)(1)(D) of this title 
    shall be--
            (i) the 90th day after the adjournment of the next regular 
        session of the appropriate State legislature which convenes 
        after October 12, 1976, or
            (ii) if the primary source of lending capital for such 
        lender is derived from the sale of bonds, and the constitution 
        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 purpose 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 1077(a)(2)(B) of this title or such 
        first installment need not be paid pursuant to section 
        1077(a)(2)(C) of this title; and
            (D) the original principal amount of loans repaid by the 
        Secretary under section 1087 of this title.

                      (3) Payments to assignees

        For the purpose of this subsection, payments by the Secretary 
    under section 1080 of this title to an assignee 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 1080 or 1087 of this title.

(Pub. L. 89-329, title IV, Sec. 425, as added Pub. L. 99-498, title IV, 
Sec. 402(a), Oct. 17, 1986, 100 Stat. 1359; amended Pub. L. 100-50, 
Sec. 10(a), June 3, 1987, 101 Stat. 341; Pub. L. 102-325, title IV, 
Sec. 413, July 23, 1992, 106 Stat. 512; Pub. L. 103-208, Sec. 2(c)(2), 
(3), Dec. 20, 1993, 107 Stat. 2460, 2461; Pub. L. 105-244, title IV, 
Sec. 415, Oct. 7, 1998, 112 Stat. 1679.)

                       References in Text

    Section 1078-1 of this title, referred to in subsec. (a)(2)(A), was 
repealed by Pub. L. 103-66, title IV, Sec. 4047(b)-(d), Aug. 10, 1993, 
107 Stat. 364, eff. July 1, 1994, except with respect to loans provided 
under that section as it existed prior to Aug. 10, 1993. Subsequently, a 
new section 1078-1, relating to voluntary flexible agreements with 
guaranty agencies, was enacted by Pub. L. 105-244, title IV, Sec. 418, 
Oct. 7, 1998, 112 Stat. 1691.


                            Prior Provisions

    A prior section 1075, Pub. L. 89-329, title IV, Sec. 425, Nov. 8, 
1965, 79 Stat. 1238; Pub. L. 90-575, title I, Secs. 116(b)(1), 
120(a)(2), Oct. 16, 1968, 82 Stat. 1023, 1027; Pub. L. 92-318, title I, 
Secs. 132A(a), 132B(a), June 23, 1972, 86 Stat. 261, 262; Pub. L. 94-
482, title I, Sec. 127(a), Oct. 12, 1976, 90 Stat. 2104; Pub. L. 95-43, 
Sec. 1(a)(15)-(17), June 15, 1977, 91 Stat. 214; Pub. L. 95-566, 
Sec. 5(b)(2), Nov. 1, 1978, 92 Stat. 2403; Pub. L. 96-374, title IV, 
Sec. 412(a), (b), (f), title XIII, Sec. 1391(a)(1), Oct. 3, 1980, 94 
Stat. 1416, 1417, 1503; Pub. L. 97-35, title V, Sec. 535(a), (b), Aug. 
13, 1981, 95 Stat. 455; Pub. L. 99-272, title XVI, Sec. 16013(e)(1), 
Apr. 7, 1986, 100 Stat. 341, limited Federal loan insurance, prior to 
the general revision of this part by Pub. L. 99-498.


                               Amendments

    1998--Subsec. (a)(1)(A)(i)(I). Pub. L. 105-244, Sec. 415(1)(A), 
inserted ``and'' after semicolon.
    Subsec. (a)(1)(A)(i)(II), (III). Pub. L. 105-244, Sec. 415(1)(B), 
added subcl. (II) and struck out former subcls. (II) and (III) which 
read as follows:
    ``(II) $1,750, if such student is enrolled in a program whose length 
is less than one academic year, but at least \2/3\ of such an academic 
year; and
    ``(III) $875, if such student is enrolled in a program whose length 
is less than \2/3\, but at least \1/3\, of such an academic year;''.
    Subsec. (a)(1)(A)(iii)(II). Pub. L. 105-244, Sec. 415(2), inserted 
``and'' after semicolon at end.
    1993--Subsec. (a)(1)(A)(ii), (iii). Pub. L. 103-208, 
Sec. 2(c)(2)(A), added cls. (ii) and (iii) and struck out former cls. 
(ii) and (iii) which read as follows:
    ``(ii) the case of a student who has successfully completed such 
first year but has not successfully completed the remainder of a program 
of undergraduate study--
        ``(I) $3,500, if such student is enrolled in a program whose 
    length is at least one academic year in length (as determined under 
    section 1088 of this title);
        ``(II) $2,325, if such student is enrolled in a program whose 
    length is less than one academic year, but at least \2/3\ of such an 
    academic year; and
        ``(III) $1,175, if such student is enrolled in a program whose 
    length is less than \2/3\, but at least \1/3\, of such an academic 
    year;
    ``(iii) in the case of a student at an eligible institution who has 
successfully completed such first and second year but has not 
successfully completed the remainder of a program of undergraduate 
study--
        ``(I) $5,500, if such student is enrolled in a program whose 
    length is at least one academic year in length (as determined under 
    section 1088 of this title);
        ``(II) $3,675, if such student is enrolled in a program whose 
    length is less than one academic year, but at least \2/3\ of such an 
    academic year; and
        ``(III) $1,825, if such student is enrolled in a program whose 
    length is less than \2/3\, but at least \1/3\, of such an academic 
    year; and''.
    Subsec. (a)(1)(A)(iv). Pub. L. 103-208, Sec. 2(c)(2)(B), substituted 
a period for semicolon at end.
    Subsec. (a)(1)(C). Pub. L. 103-208, Sec. 2(c)(3), added subpar. (C).
    1992--Subsec. (a)(1)(A). Pub. L. 102-325, Sec. 413(1), added cls. 
(i) to (iv) and struck out former cls. (i) to (iii) which read as 
follows:
    ``(i) $2,625, in the case of a student who has not successfully 
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 undergraduate education; or
    ``(iii) $7,500, in the case of a graduate or professional student 
(as defined in regulations of the Secretary).''
    Subsec. (a)(2)(A). Pub. L. 102-325, Sec. 413(2), added cls. (i) and 
(ii) and concluding provision and struck out former cls. (i) and (ii) 
which read as follows:
    ``(i) $17,250, in the case of any student who has not successfully 
completed a program of undergraduate education, excluding loans made 
under section 1078-1 or 1078-2 of this title; 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), excluding loans made under section 1078-1 or 
1078-2 of this title.''
    1987--Subsec. (a)(2)(A)(i). Pub. L. 100-50, Sec. 10(a)(1), inserted 
``, excluding loans made under section 1078-1 or 1078-2 of this title'' 
after ``undergraduate education''.
    Subsec. (a)(2)(A)(ii). Pub. L. 100-50, Sec. 10(a)(2), inserted ``, 
excluding loans made under section 1078-1 or 1078-2 of this title'' 
after ``graduate or professional student)''.


                    Effective Date of 1998 Amendment

    Amendment by Pub. L. 105-244 effective Oct. 1, 1998, except as 
otherwise provided in Pub. L. 105-244, see section 3 of Pub. L. 105-244, 
set out as a note under section 1001 of this title.


                    Effective Date of 1993 Amendment

    Amendment by section 2(c)(2) of Pub. L. 103-208 effective on and 
after July 1, 1994 and amendment by section 2(c)(3) of Pub. L. 103-208 
effective on and after Dec. 20, 1993, see section 5(b)(2), (6) of Pub. 
L. 103-208 set out as a note under section 1051 of this title.


                    Effective Date of 1992 Amendment

    Amendment by Pub. L. 102-325 effective July 23, 1992, with changes 
made in subsec. (a), relating to annual and aggregate loan limits, 
applicable with respect to loans for which first disbursement is made on 
or after July 1, 1993, except that changes made in subsec. (a)(1)(A)(i) 
applicable with respect to loans for which first disbursement is made on 
or after Oct. 1, 1992, and except that changes made in subsec. 
(a)(1)(A)(iv) applicable with respect to loans to cover costs of 
instruction for periods of enrollment beginning on or after Oct. 1, 
1993, see section 432 of Pub. L. 102-325, set out as a note under 
section 1078 of this title.


                    Effective Date of 1987 Amendment

    Amendment by Pub. L. 100-50 effective as if enacted as part of the 
Higher Education Amendments of 1986, Pub. L. 99-498, see section 27 of 
Pub. L. 100-50, set out as a note under section 1001 of this title.


                             Effective Date

    Section effective Oct. 17, 1986, except that subsec. (a) of this 
section applicable only to loans disbursed on or after Jan. 1, 1987, or 
made to cover the costs of instruction for periods of enrollment 
beginning on or after Jan. 1, 1987, see section 402(b) of Pub. L. 99-
498, set out as a note under section 1071 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 1080, 1094 of this title.
