 
      CHAPTER 28--HIGHER EDUCATION RESOURCES AND STUDENT ASSISTANCE
 
                    SUBCHAPTER IV--STUDENT ASSISTANCE
 
              Part B--Federal Family Education Loan Program
 
Sec. 1077. Eligibility of student borrowers and terms of 
        federally insured student loans
        

(a) List of requirements

    Except as provided in section 1078-3 of this title, 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 1091 of this title, (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 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;
            (B) provides for repayment (except as provided in subsection 
        (c) of this section) 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 determined 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 repayment 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 student 
            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 repayment 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--
                (i) during which the borrower--
                    (I) is pursuing at least a half-time course of study 
                as determined by an eligible institution; or
                    (II) is pursuing a course of study pursuant to a 
                graduate fellowship program approved by the Secretary, 
                or pursuant to a rehabilitation training program for 
                individuals with disabilities approved by the Secretary,

          except that no borrower shall be eligible for a deferment 
            under this clause, or a loan made under this part (other 
            than a loan made under section 1078-2 or 1078-3 of this 
            title), while serving in a medical internship or residency 
            program;
                (ii) not in excess of 3 years during which the borrower 
            is seeking and unable to find full-time employment; or
                (iii) not in excess of 3 years for any reason which the 
            lender determines, in accordance with regulations prescribed 
            by the Secretary under section 1085(o) of this title, has 
            caused or will cause the borrower to have an economic 
            hardship;

        and provides that any such period shall not be included in 
        determining the 10-year period described 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 1077a of this title, which interest 
        shall be payable in installments over the period of the loan 
        except that, if provided in the note or other written agreement, 
        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 interest 
        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 1087 of this title;
            (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,\1\ of disclosure of 
        information concerning such loan to credit bureau organizations 
        under section 1080a of this title, and (ii) provides that the 
        lender on request of the borrower will provide information on 
        the repayment status of the note to such organizations;
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    \1\ So in original. The comma probably should not appear.
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            (H) provides that, no more than 6 months prior to the date 
        on which the borrower's first payment on a loan is due, the 
        lender shall offer the borrower the option of repaying the loan 
        in accordance with a graduated or income-sensitive repayment 
        schedule established by the lender and in accordance with the 
        regulations of the Secretary; and
            (I) 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--
            (A) that nothing in this subchapter and part C of subchapter 
        I of chapter 34 of title 42 shall be interpreted--
                (i) to allow the Secretary to require checks to be made 
            copayable to the institution and the borrower; or
                (ii) to prohibit the disbursement of loan proceeds by 
            means other than by check; and

            (B) in the case of any student who is studying outside the 
        United States in a program of study abroad that is approved for 
        credit by the home institution at which such student is 
        enrolled, the funds shall, at the request of the borrower, be 
        delivered directly to the student and the checks may be 
        endorsed, and fund transfers authorized, pursuant to an 
        authorized power-of-attorney; and

        (4) the funds borrowed by a student are disbursed in accordance 
    with section 1078-7 of this title.

(b) Special rules for multiple disbursement

    For the purpose of subsection (a)(4) of this section--
        (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 1078-2 or 1078-3 of this title, or 
    made to a student to cover the cost of attendance at an eligible 
    institution outside the United States.

(c) Special repayment rules

    Except as provided in subsection (a)(2)(H) of this section, the 
total of the payments by a borrower 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 (but in no instance less than the amount of interest due 
and payable).

(d) Borrower information

    The lender shall obtain the borrower's driver's license number, if 
any, at the time of application for the loan.

(Pub. L. 89-329, title IV, Sec. 427, as added Pub. L. 99-498, title IV, 
Sec. 402(a), Oct. 17, 1986, 100 Stat. 1361; amended Pub. L. 100-50, 
Sec. 10(b), (c), June 3, 1987, 101 Stat. 341; Pub. L. 100-369, 
Secs. 5(b)(1), 7(c), 11(a), July 18, 1988, 102 Stat. 836-838; Pub. L. 
101-239, title II, Secs. 2002(a)(1), 2004(b)(2), Dec. 19, 1989, 103 
Stat. 2111, 2116; Pub. L. 102-164, title VI, Secs. 601(a), 602(a), Nov. 
15, 1991, 105 Stat. 1065, 1066; Pub. L. 102-325, title IV, Sec. 414, 
July 23, 1992, 106 Stat. 513; Pub. L. 103-208, Sec. 2(c)(4), Dec. 20, 
1993, 107 Stat. 2461.)


                            Prior Provisions

    A prior section 1077, Pub. L. 89-329, title IV, Sec. 427, Nov. 8, 
1965, 79 Stat. 1238; Pub. L. 89-794, title XI, Sec. 1101(b)(1), Nov. 8, 
1966, 80 Stat. 1476; Pub. L. 90-460, Sec. 2(a)(1), Aug. 3, 1968, 82 
Stat. 635; Pub. L. 90-575, title I, Secs. 113(b)(2), 116(b)(2), 117(c), 
120(c)(2), Oct. 16, 1968, 82 Stat. 1021, 1023, 1026, 1027; Pub. L. 92-
318, title I, Secs. 132B(b), 132C(c), June 23, 1972, 86 Stat. 262, 263; 
Pub. L. 94-482, title I, Sec. 127(a), Oct. 12, 1976, 90 Stat. 2106; Pub. 
L. 95-43, Sec. 1(a)(9), (18), June 15, 1977, 91 Stat. 213, 214; Pub. L. 
95-566, Sec. 5(a)(1), Nov. 1, 1978, 92 Stat. 2403; Pub. L. 96-374, title 
IV, Secs. 413(a), (c), 415(a)(2), (b)(1), 416(a)(2), 423(a)(1), title 
XIII, Sec. 1391(a)(1), Oct. 3, 1980, 94 Stat. 1417-1421, 1432, 1503; 
Pub. L. 97-35, title V, Sec. 537(b)(1), (d)(2), (e)(1), Aug. 13, 1981, 
95 Stat. 456, 457; Pub. L. 98-79, Sec. 10[(a)], Aug. 15, 1983, 97 Stat. 
484; Pub. L. 99-272, title XVI, Secs. 16012(a), 16013(b), 16017(b)(1), 
Apr. 7, 1986, 100 Stat. 339, 340, 347, set out conditions for Federal 
loan insurance, prior to the general revision of this part by Pub. L. 
99-498.


                               Amendments

    1993--Subsec. (a)(2)(C)(i). Pub. L. 103-208 inserted ``section'' 
before ``1078-2 or 1078-3''.
    1992--Subsec. (a)(2)(A). Pub. L. 102-325, Sec. 414(a), amended 
subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: 
``is made without security and without endorsement, except that prior to 
making a loan insurable by the Secretary under this part a lender 
shall--
        ``(i) obtain a credit report, from at least one national credit 
    bureau organization, with respect to a loan applicant who will be at 
    least 21 years of age as of July 1 of the award year for which 
    assistance is being sought, for which the lender may charge the 
    applicant an amount not to exceed the lesser of $25 or the actual 
    cost of obtaining the credit report; and
        ``(ii) require an applicant of the age specified in clause (i) 
    who, in the judgment of the lender in accordance with the 
    regulations of the Secretary, has an adverse credit history, to 
    obtain a credit worthy cosigner in order to obtain the loan, 
    provided that, for purposes of this clause, an insufficient or 
    nonexistent credit history may not be considered to be an adverse 
    credit history;''.
    Subsec. (a)(2)(C). Pub. L. 102-325, Sec. 414(b), amended subpar. (C) 
generally, revising and restating as cls. (i) to (iii) provisions 
formerly contained in cls. (i) to (xi).
    Subsec. (a)(2)(G) to (I). Pub. L. 102-325, Sec. 414(c)(1), struck 
out ``and'' at end of subpar. (G), added subpar. (H), and redesignated 
former subpar. (H) as (I).
    Subsec. (a)(3). Pub. L. 102-325, Sec. 414(d), amended par. (3) 
generally. Prior to amendment, par. (3) read as follows: ``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 subchapter and 
part C of subchapter I of chapter 34 of title 42 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; and''.
    Subsec. (c). Pub. L. 102-325, Sec. 414(c)(2), (e), substituted 
``Special repayment rules'' for ``Minimum repayment rate'' in heading 
and in text ``Except as provided in subsection (a)(2)(H) of this 
section, the total'' for ``The total'' and ``(but in no instance less 
than the amount of interest due and payable)'' for ``, 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''.
    1991--Subsec. (a)(2)(A). Pub. L. 102-164, Sec. 601(a), amended 
subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: 
``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;''.
    Subsec. (d). Pub. L. 102-164, Sec. 602(a), added subsec. (d).
    1989--Subsec. (a)(2)(C)(i). Pub. L. 101-239, Sec. 2002(a)(1), 
inserted before semicolon at end ``, except that no borrower shall be 
eligible for a deferment under this clause, or a loan made under this 
part (other than a loan made under section 1078-2 or 1078-3 of this 
title), while serving in a medical internship or residency program''.
    Subsec. (a)(4). Pub. L. 101-239, Sec. 2004(b)(2), amended par. (4) 
generally. Prior to amendment, par. (4) read as follows: ``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 $1,000 or more, the proceeds of the loan will, 
subject to subsection (b) of this section, 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 disbursed after not less 
than one-third of such period (except as necessary to permit the second 
installment to be disbursed at the beginning of the second semester, 
quarter, or similar division of such period of enrollment).''
    1988--Subsec. (a)(2)(C)(v). Pub. L. 100-369, Sec. 7(c), substituted 
``Internal Revenue Code of 1986'' for ``Internal Revenue Code of 1954'', 
which for purposes of codification was translated as ``title 26'' thus 
requiring no change in text.
    Subsec. (a)(2)(C)(vii). Pub. L. 100-369, Sec. 11(a), inserted 
``after January 1, 1986,'' after ``service''.
    Subsec. (b)(2). Pub. L. 100-369, Sec. 5(b)(1), substituted ``section 
1078-2 or 1078-3'' for ``section 1078-1, 1078-2, or 1078-3''.
    1987--Subsec. (a)(2)(C)(vi). Pub. L. 100-50, Sec. 10(b)(1), inserted 
``nonprofit'' before ``private''.
    Subsec. (a)(2)(C)(vii). Pub. L. 100-50, Sec. 10(b)(2), inserted ``or 
serving in an internship or residency program leading to a degree or 
certificate awarded by an institution of higher education, a hospital, 
or a health care facility that offers postgraduate training'' before 
semicolon at end.
    Subsec. (a)(4). Pub. L. 100-50, Sec. 10(c), substituted ``$1,000 or 
more'' for ``more than $1,000''.


                    Effective Date of 1993 Amendment

    Amendment by Pub. L. 103-208 effective as if included in the Higher 
Education Amendments of 1992, Pub. L. 102-325, except as otherwise 
provided, see section 5(a) of Pub. L. 103-208, set out as a note under 
section 1003 of this title.


                    Effective Date of 1992 Amendment

    Amendment by Pub. L. 102-325 effective July 23, 1992, except that 
changes made in subsec. (a)(2)(C), relating to deferments, applicable 
with respect to loans for which first disbursement is made on or after 
July 1, 1993, to an individual who is a new borrower on date such 
individual applies for a loan, and except that changes made in subsec. 
(a)(2)(H), relating to offering graduated or income sensitive repayment 
options, applicable with respect to loans for which first disbursement 
is made on or after July 1, 1993, to an individual who is a new borrower 
on date such individual applies for a loan, see section 432 of Pub. L. 
102-325, set out as a note under section 1078 of this title.


                    Effective Date of 1989 Amendment

    Section 2002(a)(4) of Pub. L. 101-239 provided that: ``The 
amendments made by this subsection [amending this section and sections 
1078 and 1087dd of this title] shall apply to any loan made, insured, or 
guaranteed under part B or part E of title IV of the Higher Education 
Act of 1965 [20 U.S.C. 1071 et seq., 1087aa et seq.], including a loan 
made before the enactment of this Act [Dec. 19, 1989], and shall take 
effect on January 1, 1990, except that such amendments shall not apply 
with respect to any portion of a period of deferment granted to a 
borrower under section 427(a)(2)(C)(i), 428(b)(1)(M)(i), or 
464(c)(2)(A)(i) of the Higher Education Act of 1965 [sections 
1077(a)(2)(C)(i), 1078(b)(1)(M)(i), 1087dd(c)(2)(A)(i) of this title] 
for service in a medical internship or residency program that is 
completed prior to the effective date of this section [Dec. 19, 1989].''
    Section 2004(c) of Pub. L. 101-239 provided that: ``The amendments 
made by this section [enacting section 1078-7 of this title and amending 
this section and section 1078 of this title] shall apply with respect to 
loans made to cover the cost of instruction for periods of enrollment 
beginning on or after January 1, 1990.''


                    Effective Date of 1988 Amendment

    Section 11(b) of Pub. L. 100-369 provided that: ``The amendments 
made by subsection (a) [amending this section and section 1078 of this 
title] and section 10(b) of the Higher Education Technical Amendments 
Act of 1987 [section 10(b) of Pub. L. 100-50, amending this section and 
section 1078 of this title] shall apply with respect to loans made, 
insured or guaranteed under part B of the Higher Education Act of 1965 
[probably means part B of title IV of Pub. L. 89-329 which is classified 
to this part], on, before, or after the date of enactment of the Higher 
Education Technical Amendments Act of 1987 [June 3, 1987].''
    Amendment by section 5(b)(1) of Pub. L. 100-369 effective with 
respect to loans made on or after Oct. 1, 1988, and amendment by section 
7(c) of Pub. L. 100-369 effective July 18, 1988, see section 13(b) of 
Pub. L. 100-369, set out as a note under section 1091 of this title.


                    Effective Date of 1987 Amendment

    Amendment by section 10(b) of Pub. L. 100-50 applicable with respect 
to loans made, insured or guaranteed under this part on, before, or 
after June 3, 1987, see section 11(b) of Pub. L. 100-369, set out as an 
Effective Date of 1988 Amendment note above.
    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)(2)(C) 
(other than cls. (viii), (ix), and (x) thereof) of this section shall 
apply only to loans to new borrowers made to cover the costs of 
instruction for periods of enrollment beginning on or after July 1, 
1987, or disbursed on or after July 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 1071, 1075, 1077a, 1078, 
1078-2, 1078-8, 1085, 1087e of this title.
