 
      CHAPTER 28--HIGHER EDUCATION RESOURCES AND STUDENT ASSISTANCE
 
                    SUBCHAPTER IV--STUDENT ASSISTANCE
 
              Part B--Federal Family Education Loan Program
 
Sec. 1078-8. Unsubsidized Stafford loans for middle-income 
        borrowers
        

(a) In general

    It is the purpose of this section to authorize insured loans under 
this part for borrowers who do not qualify for Federal interest subsidy 
payments under section 1078 of this title. Except as provided in this 
section, all terms and conditions for Federal Stafford loans established 
under section 1078 of this title shall apply to loans made pursuant to 
this section.

(b) Eligible borrowers

    Any student meeting the requirements for student eligibility under 
section 1091 of this title (including graduate and professional students 
as defined in regulations promulgated by the Secretary) shall be 
entitled to borrow an unsubsidized Federal Stafford Loan if the eligible 
institution at which the student has been accepted for enrollment, or at 
which the student is in attendance, has--
        (1) determined and documented the student's need for the loan 
    based on the student's estimated cost of attendance (as determined 
    under section 1087ll of this title) and the student's estimated 
    financial assistance, including a loan which qualifies for interest 
    subsidy payments under section 1078 of this title; and
        (2) provided the lender a statement--
            (A) certifying the eligibility of the student to receive a 
        loan under this section and the amount of the loan for which 
        such student is eligible, in accordance with subsection (c) of 
        this section; and
            (B) setting forth a schedule for disbursement of the 
        proceeds of the loan in installments, consistent with the 
        requirements of section 1078-7 of this title.

(c) Determination of amount of loan

    The determination of the amount of a loan by an eligible institution 
under subsection (b) of this section shall be calculated by subtracting 
from the estimated cost of attendance at the eligible institution any 
estimated financial assistance reasonably available to such student. An 
eligible institution may not, in carrying out the provisions of 
subsection (b) of this section, provide a statement which certifies the 
eligibility of any student to receive any loan under this section in 
excess of the amount calculated under the preceding sentence.

(d) Loan limits

                           (1) In general

        Except as provided in paragraphs (2) and (3), the annual and 
    aggregate limits for loans under this section shall be the same as 
    those established under section 1078(b)(1) of this title, less any 
    amount received by such student pursuant to the subsidized loan 
    program established under section 1078 of this title.

          (2) Annual limits for independent, graduate, and 
                            professional students

        The maximum annual amount of loans under this section an 
    independent student (or a student whose parents are unable to borrow 
    under section 1078-2 of this title or the Federal Direct PLUS Loan 
    Program) may borrow in any academic year (as defined in section 
    1088(a)(2) of this title) or its equivalent shall be the amount 
    determined under paragraph (1), plus--
            (A) in the case of such a student attending an eligible 
        institution who has not completed such student's first 2 years 
        of undergraduate study--
                (i) $4,000, if such student is enrolled in a program 
            whose length is at least one academic year in length; 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 clause (i) as the length of such 
            program measured in semester, trimester, quarter, or clock 
            hours bears to one academic year;

            (B) in the case of a student at an eligible institution who 
        has successfully completed such first and second years but has 
        not successfully completed the remainder of a program of 
        undergraduate education--
                (i) $5,000; 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;

            (C) in the case of such a student who is a graduate or 
        professional student attending an eligible institution, $10,000; 
        and
            (D) in the case of a student enrolled in coursework 
        specified in sections 1091(b)(3)(B) and 1091(b)(4)(B) of this 
        title--
                (i) $4,000 for coursework necessary for enrollment in an 
            undergraduate degree or certificate program, and, in the 
            case of a student who has obtained a baccalaureate degree, 
            $5,000 for coursework necessary for enrollment in a graduate 
            or professional program; and
                (ii) in the case of a student who has obtained a 
            baccalaureate degree, $5,000 for coursework necessary for a 
            professional credential or certification from a State 
            required for employment as a teacher in an elementary or 
            secondary school;

    except in cases where the Secretary determines,\1\ 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, 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.
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    \1\ So in original. The comma probably should not appear.
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        (3) Aggregate limits for independent, graduate, and 
                            professional students

        The maximum aggregate amount of loans under this section a 
    student described in paragraph (2) may borrow shall be the amount 
    described in paragraph (1), adjusted to reflect the increased annual 
    limits described in paragraph (2), as prescribed by the Secretary by 
    regulation. Interest capitalized shall not be deemed to exceed such 
    maximum aggregate amount.

(e) Payment of principal and interest

                    (1) Commencement of repayment

        Repayment of principal on loans made under this section shall 
    begin at the beginning of the repayment period described in section 
    1078(b)(7) of this title. Not less than 30 days prior to the 
    anticipated commencement of such repayment period, the holder of 
    such loan shall provide notice to the borrower that interest will 
    accrue before repayment begins and of the borrower's option to begin 
    loan repayment at an earlier date.

                   (2) Capitalization of interest

        (A) Interest on loans made under this section for which payments 
    of principal are not required during the in-school and grace periods 
    or for which payments are deferred under sections 1077(a)(2)(C) and 
    1078(b)(1)(M) of this title shall, if agreed upon by the borrower 
    and the lender--
            (i) be paid monthly or quarterly; or
            (ii) be added to the principal amount of the loan by the 
        lender only--
                (I) when the loan enters repayment;
                (II) at the expiration of a grace period, in the case of 
            a loan that qualifies for a grace period;
                (III) at the expiration of a period of deferment or 
            forbearance; or
                (IV) when the borrower defaults.

        (B) The capitalization of interest described in subparagraph (A) 
    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 1078(a) of this title 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 1077a of this title.

                          (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 lengthened 
        or shortened,

    in order to reflect adjustments in interest rates occurring as a 
    consequence of section 1077a(c)(4) of this title.

                        (6) Repayment period

        For purposes of calculating the repayment period under section 
    1078(b)(9) of this title, such period shall commence at the time the 
    first payment of principal is due from the borrower.

                  (7) Qualification for forbearance

        A lender may grant the borrower of a loan under this section a 
    forbearance for a period not to exceed 60 days if the lender 
    reasonably determines that such a forbearance from collection 
    activity is warranted following a borrower's request for 
    forbearance, deferment, or a change in repayment plan, or a request 
    to consolidate loans in order to collect or process appropriate 
    supporting documentation related to the request. During any such 
    period, interest on the loan shall accrue but not be capitalized.

(f) Repealed. Pub. L. 105-244, title IV, Sec. 423(f), Oct. 7, 1998, 112 
        Stat. 1698

(g) Single application form and loan repayment schedule

    A guaranty agency shall use a single application form and a single 
repayment schedule for subsidized Federal Stafford loans made pursuant 
to section 1078 of this title and for unsubsidized Federal Stafford 
loans made pursuant to this section.

(h) Insurance premium

    Each State or nonprofit private institution or organization having 
an agreement with the Secretary under section 1078(b)(1) of this title 
may charge a borrower under this section an insurance premium equal to 
not more than 1.0 percent of the principal amount of the loan, if such 
premium will not be used for incentive payments to lenders.

(Pub. L. 89-329, title IV, Sec. 428H, as added Pub. L. 102-325, title 
IV, Sec. 422, July 23, 1992, 106 Stat. 535; amended Pub. L. 103-66, 
title IV, Secs. 4047(a), 4102(b), Aug. 10, 1993, 107 Stat. 363, 366; 
Pub. L. 103-208, Sec. 2(c)(42)-(45), Dec. 20, 1993, 107 Stat. 2466, 
2467; Pub. L. 104-134, title I, Sec. 101(d) [title V, Sec. 514(a)], Apr. 
26, 1996, 110 Stat. 1321-211, 1321-245; renumbered title I, Pub. L. 104-
140, Sec. 1(a), May 2, 1996, 110 Stat. 1327; Pub. L. 105-244, title IV, 
Sec. 423, Oct. 7, 1998, 112 Stat. 1696.)

                          Codification

    Amendments by section 2(c)(42), (45) of Pub. L. 103-208 (which were 
effective as if included in Pub. L. 102-325) were executed to this 
section as amended by Pub. L. 102-325 and Pub. L. 103-66, to reflect the 
probable intent of Congress.


                               Amendments

    1998--Subsec. (b). Pub. L. 105-244, Sec. 423(a), amended heading and 
text of subsec. (b) generally. Prior to amendment, text read as follows: 
``Any student meeting the requirements for student eligibility under 
section 1091 of this title (including graduate and professional students 
as defined in regulations promulgated by the Secretary) shall be 
entitled to borrow an unsubsidized Stafford loan. Such student shall 
provide 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--
        ``(1) sets forth such student's estimated cost of attendance (as 
    determined under section 1087ll of this title);
        ``(2) sets forth such student's estimated financial assistance, 
    including a loan which qualifies for subsidy payments under section 
    1078 of this title; and
        ``(3) certifies the eligibility of the student to receive a loan 
    under this section and the amount of the loan for which such student 
    is eligible, in accordance with subsection (c) of this section.''
    Subsec. (d)(2). Pub. L. 105-244, Sec. 423(b)(1)(A), in introductory 
provisions, inserted ``(as defined in section 1088(a)(2) of this 
title)'' after ``academic year'' and struck out ``or in any period of 7 
consecutive months, whichever is longer,'' after ``or its equivalent''.
    Subsec. (d)(2)(A). Pub. L. 105-244, Sec. 423(b)(1)(B), substituted 
``length; and'' for ``length (as determined under section 1088 of this 
title);'' in cl. (i), added cl. (ii), and struck out former cls. (ii) 
and (iii) which read as follows:
    ``(ii) $2,500, 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) $1,500, 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. (d)(2)(D). Pub. L. 105-244, Sec. 423(b)(1)(C), (D), added 
subpar. (D).
    Subsec. (d)(3). Pub. L. 105-244, Sec. 423(b)(2), inserted at end 
``Interest capitalized shall not be deemed to exceed such maximum 
aggregate amount.''
    Subsec. (e)(2). Pub. L. 105-244, Sec. 423(c), amended heading and 
text of par. (2) generally. Prior to amendment, text read as follows: 
``Interest on loans made under this section for which payments of 
principal are not required during the in-school and grace periods or for 
which payments are deferred under sections 1077(a)(2)(C) and 
1078(b)(1)(M) of this title shall, if agreed upon by the borrower and 
the lender (A) be paid monthly or quarterly, or (B) be added to the 
principal amount of the loan not more frequently than quarterly by the 
lender. Such capitalization of interest shall not be deemed to exceed 
the annual insurable limit on account of the student.''
    Subsec. (e)(6). Pub. L. 105-244, Sec. 423(d), which directed 
substitution of ``repayment period under section 1078(b)(9) of this 
title'' for ``10 year repayment period under section 1078(b)(1)(D) of 
this title'', was executed by making the substitution for ``10-year 
repayment period under section 1078(b)(1)(D) of this title'' to reflect 
the probable intent of Congress.
    Subsec. (e)(7). Pub. L. 105-244, Sec. 423(e), added par. (7).
    Subsec. (f). Pub. L. 105-244, Sec. 423(f), struck out heading and 
text of subsec. (f) which provided for lenders to charge borrowers 
origination fees on loans.
    1996--Subsec. (d)(2). Pub. L. 104-134 substituted semicolon for 
period at end of subpar. (C) and inserted concluding provisions.
    1993--Subsec. (b). Pub. L. 103-66, Sec. 4047(a)(1), inserted 
``(including graduate and professional students as defined in 
regulations promulgated by the Secretary)'' in introductory provisions.
    Subsec. (d). Pub. L. 103-66, Sec. 4047(a)(2), amended subsec. (d) 
generally. Prior to amendment, subsec. (d) read as follows: ``The annual 
and aggregate limits for loans under this section shall be the same as 
those established under section 1078(b)(1) of this title, less any 
amount received by such student pursuant to the subsidized loan program 
established under section 1078 of this title.''
    Subsec. (d)(2)(B). Pub. L. 103-208, Sec. 2(c)(42), amended subpar. 
(B) generally. Prior to amendment, subpar. (B) read as follows: ``in the 
case of such a student attending an eligible institution who has 
completed the first 2 years of undergraduate study but who has not 
completed the remainder of a program of undergraduate study--
        ``(i) $5,000, 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 section);
        ``(ii) $3,325, 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) $1,675, 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''. See Codification note above.
    Subsec. (e)(1). Pub. L. 103-208, Sec. 2(c)(43), substituted ``shall 
begin at the beginning of the repayment period described in section 
1078(b)(7) of this title.'' for ``shall commence 6 months after the 
month in which the student ceases to carry at least one-half the normal 
full-time workload as determined by the institution.'' and inserted at 
end ``Not less than 30 days prior to the anticipated commencement of 
such repayment period, the holder of such loan shall provide notice to 
the borrower that interest will accrue before repayment begins and of 
the borrower's option to begin loan repayment at an earlier date.''
    Subsec. (e)(4). Pub. L. 103-208, Sec. 2(c)(44), substituted 
``section 1077a'' for ``section 1077a(e)''.
    Subsec. (e)(5), (6). Pub. L. 103-66, Sec. 4047(a)(3), added pars. 
(5) and (6).
    Subsec. (f). Pub. L. 103-66, Sec. 4102(b)(1)(A), substituted 
``Origination fee'' for ``Insurance premium'' in section catchline.
    Subsec. (f)(1). Pub. L. 103-66, Sec. 4102(b)(1)(B), (C), struck out 
reference to insurance premium in heading and in text substituted ``an 
origination fee in the amount of 3.0 percent'' for ``a combined 
origination fee and insurance premium in the amount of 6.5 percent'' and 
struck out second sentence which read as follows: ``A guaranty agency 
may not charge an insurance premium on any loan made under this 
section.''
    Subsec. (f)(2). Pub. L. 103-66, Sec. 4102(b)(1)(D), substituted 
``origination fee'' for ``combined fee and premium''.
    Subsec. (f)(3). Pub. L. 103-66, Sec. 4102(b)(1)(E), substituted 
``origination fee'' for ``combined origination fee and insurance 
premium''.
    Subsec. (f)(4). Pub. L. 103-66, Sec. 4102(b)(1)(F), in heading 
substituted ``origination fee'' for ``insurance premium'' and in text 
substituted ``origination fees'' for ``combined origination fee and 
insurance premiums'' and ``to pay'' for ``and premiums to pay''.
    Subsec. (f)(5). Pub. L. 103-66, Sec. 4102(b)(1)(G), inserted 
``origination fee and'' in heading and in text substituted ``do not 
exceed the combined origination fee under this subsection and the 
insurance premium under subsection (h) of this section, the Secretary is 
directed to lower the origination fee and insurance premium 
accordingly'' for ``do not exceed the 6.5 percent insurance premium, the 
Secretary is directed to lower the insurance premium accordingly''.
    Subsec. (h). Pub. L. 103-208, Sec. 2(c)(45), redesignated subsec. 
(l) as (h). See Codification note above.
    Subsec. (l). Pub. L. 103-208, Sec. 2(c)(45), redesignated subsec. 
(l) as (h). See Codification note above.
    Pub. L. 103-66, Sec. 4102(b)(2), added subsec. (l).


                    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 1996 Amendment

    Section 101(d) [title V, Sec. 514(b)] of Pub. L. 104-134 provided 
that: ``The amendments made by subsection (a) [amending this section] 
shall be effective for loans made to cover the cost of instruction for 
periods of enrollment beginning on or after July 1, 1996.''


                    Effective Date of 1993 Amendments

    Amendment by section 2(c)(42)-(43)(A), (44), (45) of Pub. L. 103-208 
effective as if included in the Higher Education Amendments of 1992, 
Pub. L. 102-325, except as otherwise provided, and amendment by section 
2(c)(43)(B) of Pub. L. 103-208 effective on and after Apr. 1, 1994, see 
section 5(a), (b)(5) of Pub. L. 103-208, set out as a note under section 
1051 of this title.
    Section 4047(d) of Pub. L. 103-66 provided that: ``Except as 
otherwise provided herein [see section 4047(c) of Pub. L. 103-66, set 
out below], the amendments made by this section [amending this section 
and repealing section 1078-1 of this title] shall take effect on July 1, 
1994.''
    Amendment by section 4102(b) of Pub. L. 103-66 effective July 1, 
1994, see section 4102(d) of Pub. L. 103-66, set out as a note under 
section 1078 of this title.


                             Effective Date

    Section effective with respect to loans made to cover the cost of 
instruction for periods of enrollment beginning on or after Oct. 1, 
1992, see section 432(a)(12) of Pub. L. 102-325, set out as an Effective 
Date of 1992 Amendment note under section 1078 of this title.


  Continuing Applicability of Terms, Conditions, and Benefits of Loans

    Section 4047(c) of Pub. L. 103-66 provided that: ``Notwithstanding 
the amendments made by this section [amending this section and repealing 
section 1078-1 of this section], with respect to loans provided under 
sections 428A [former 20 U.S.C. 1078-1] and 428H of the Act [20 U.S.C. 
1078-8] (as such sections existed on the date preceding the date of 
enactment of this Act [Aug. 10, 1993]) the terms, conditions and 
benefits applicable to such loans under such sections shall continue to 
apply to such loans after the date of enactment of this Act.''

                  Section Referred to in Other Sections

    This section is referred to in sections 1072a, 1077a, 1078, 1078-10, 
1083, 1085, 1087, 1087-1, 1087d, 1087e, 1087j, 1091, 1091b of this 
title.
