 
      CHAPTER 28--HIGHER EDUCATION RESOURCES AND STUDENT ASSISTANCE
 
                    SUBCHAPTER IV--STUDENT ASSISTANCE
 
           Part C--William D. Ford Federal Direct Loan Program
 
Sec. 1087c. Selection of institutions for participation and 
        origination
        

(a) General authority

    The Secretary shall enter into agreements pursuant to section 
1087d(a) of this title with institutions of higher education to 
participate in the direct student loan program under this part, and 
agreements pursuant to section 1087d(b) of this title with institutions 
of higher education, or consortia thereof, to originate loans in such 
program, for academic years beginning on or after July 1, 1994. 
Alternative origination services, through which an entity other than the 
participating institution at which the student is in attendance 
originates the loan, shall be provided by the Secretary, through 1 or 
more contracts under section 1087f(b) of this title or such other means 
as the Secretary may provide, for students attending participating 
institutions that do not originate direct student loans under this part. 
Such agreements for the academic year 1994-1995 shall, to the extent 
feasible, be entered into not later than January 1, 1994.

(b) Selection criteria

                           (1) Application

        Each institution of higher education desiring to participate in 
    the direct student loan program under this part shall submit an 
    application satisfactory to the Secretary containing such 
    information and assurances as the Secretary may require.

                       (2) Selection procedure

        The Secretary shall select institutions for participation in the 
    direct student loan program under this part, and shall enter into 
    agreements with such institutions under section 1087d(a) of this 
    title, from among those institutions that submit the applications 
    described in paragraph (1), and meet such other eligibility 
    requirements as the Secretary shall prescribe.

(c) Selection criteria for origination

                           (1) In general

        The Secretary may enter into a supplemental agreement with an 
    institution (or a consortium of such institutions) that--
            (A) has an agreement under subsection 1087d(a) of this 
        title;
            (B) desires to originate loans under this part; and
            (C) meets the criteria described in paragraph (2).

                       (2) Selection criteria

        The Secretary may approve an institution to originate loans only 
    if such institution--
            (A) is not on the reimbursement system of payment for any of 
        the programs under subpart 1 or 3 of part A of this subchapter, 
        part C of subchapter I of chapter 34 of title 42, or part D of 
        this subchapter;
            (B) is not overdue on program or financial reports or audits 
        required under this subchapter;
            (C) is not subject to an emergency action, or a limitation, 
        suspension, or termination under section 1078(b)(1)(T), 1082(h), 
        or 1094(c) of this title;
            (D) in the opinion of the Secretary, has not had severe 
        performance deficiencies for any of the programs under this 
        subchapter, including such deficiencies demonstrated by audits 
        or program reviews submitted or conducted during the 5 calendar 
        years immediately preceding the date of application;
            (E) provides an assurance that such institution has no 
        delinquent outstanding debts to the Federal Government, unless 
        such debts are being repaid under or in accordance with a 
        repayment arrangement satisfactory to the Federal Government, or 
        the Secretary in the Secretary's discretion determines that the 
        existence or amount of such debts has not been finally 
        determined by the cognizant Federal agency; and
            (F) meets such other criteria as the Secretary may establish 
        to protect the financial interest of the United States and to 
        promote the purposes of this part.

                 (3) Regulations governing approval

        The Secretary shall promulgate and publish in the Federal 
    Register regulations governing the approval of institutions to 
    originate loans under this part in accordance with section 
    1087g(a)(2) of this title.

(d) Eligible institutions

    The Secretary may not select an institution of higher education for 
participation under this section unless such institution is an eligible 
institution under section 1085(a) of this title.

(e) Consortia

    Subject to such requirements as the Secretary may prescribe, 
eligible institutions of higher education (as determined under 
subsection (d) of this section) with agreements under section 1087d(a) 
of this title may apply to the Secretary as consortia to originate loans 
under this part for students in attendance at such institutions. Each 
such institution shall be required to meet the requirements of 
subsection (c) of this section with respect to loan origination.

(Pub. L. 89-329, title IV, Sec. 453, as added Pub. L. 99-498, title IV, 
Sec. 404, Oct. 17, 1986, 100 Stat. 1438; amended Pub. L. 102-325, title 
IV, Sec. 451, July 23, 1992, 106 Stat. 569; Pub. L. 103-66, title IV, 
Sec. 4021, Aug. 10, 1993, 107 Stat. 342; Pub. L. 103-208, Sec. 2(e), 
Dec. 20, 1993, 107 Stat. 2470; Pub. L. 105-244, title IV, Sec. 451, Oct. 
7, 1998, 112 Stat. 1715.)

                          Codification

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


                            Prior Provisions

    A prior section 1087c, Pub. L. 89-329, title IV, Sec. 453, as added 
Pub. L. 90-575, title I, Sec. 141, Oct. 16, 1968, 82 Stat. 1032; amended 
Pub. L. 92-318, title I, Sec. 136(b)(2), June 23, 1972, 86 Stat. 272, 
authorized grants and contracts for training and research in cooperative 
education programs, prior to repeal by Pub. L. 94-482, title I, 
Sec. 129(a), Oct. 12, 1976, 90 Stat. 2144, eff. 30 days after Oct. 12, 
1976.


                               Amendments

    1998--Subsec. (a). Pub. L. 105-244, Sec. 451(a), amended heading, 
redesignated par. (1) as entire subsec., and struck out pars. (2) to (4) 
which provided for transition from loan programs under part B of this 
subchapter to direct student loan program under this part and defined 
term ``new student loan volume''.
    Subsec. (b)(2). Pub. L. 105-244, Sec. 451(b), substituted 
``prescribe.'' for ``prescribe, by, to the extent possible--
        ``(A)(i) categorizing such institutions according to anticipated 
    loan volume, length of academic program, control of the institution, 
    highest degree offered, size of student enrollment, geographic 
    location, annual loan volume, and default experience; and
        ``(ii) beginning in academic year 1995-1996 selecting 
    institutions that are reasonably representative of each of the 
    categories described pursuant to clause (i); and
        ``(B) if the Secretary determines it necessary in order to carry 
    out the purposes of subparagraph (A) and attain such reasonable 
    representation (as required by subparagraph (A)), selecting 
    additional institutions.''
    Subsec. (c)(2). Pub. L. 105-244, Sec. 451(c)(1)(A), (B), substituted 
``Selection criteria'' for ``Transition selection criteria'' in heading 
and ``The Secretary'' for ``For academic year 1994-1995, the Secretary'' 
in introductory provisions.
    Subsec. (c)(2)(A). Pub. L. 105-244, Sec. 451(c)(1)(E), redesignated 
subpar. (B) as (A).
    Pub. L. 105-244, Sec. 451(c)(1)(C), struck out subpar. (A) which 
read as follows: ``made loans under part D of this subchapter in 
academic year 1993-1994 and did not exceed the applicable maximum 
default rate under section 1087bb(g) of this title for the most recent 
fiscal year for which data are available;''.
    Subsec. (c)(2)(B) to (D). Pub. L. 105-244, Sec. 451(c)(1)(E), 
redesignated subpars. (C), (D), and (F) as (B) to (D), respectively. 
Former subpar. (B) redesignated (A).
    Subsec. (c)(2)(E). Pub. L. 105-244, Sec. 451(c)(1)(E), redesignated 
subpar. (G) as (E).
    Pub. L. 105-244, Sec. 451(c)(1)(D), struck out subpar. (E) which 
read as follows: ``in the opinion of the Secretary, has not had 
significant deficiencies identified by a State postsecondary review 
entity under subpart 1 of part G of this subchapter;''.
    Subsec. (c)(2)(F) to (H). Pub. L. 105-244, Sec. 451(c)(1)(E), 
redesignated subpars. (G) and (H) as (E) and (F), respectively. Former 
subpar. (F) redesignated (D).
    Subsec. (c)(3). Pub. L. 105-244, Sec. 451(c)(2), struck out ``after 
transition'' after ``approval'' in heading and substituted ``The 
Secretary'' for ``For academic year 1995-1996 and subsequent academic 
years, the Secretary'' in text.
    1993--Pub. L. 103-66 amended section generally, substituting 
provisions relating to selection of institutions for participation and 
origination for former provisions relating to selection by Secretary.
    Subsec. (b)(2)(B). Pub. L. 103-208 amended subpar. (B) generally. 
Prior to amendment, subpar. (B) read as follows: ``if the Secretary 
determines it necessary to carry out the purposes of this part, 
selecting additional institutions.'' See Codification note above.
    1992--Pub. L. 102-325 amended section generally, substituting 
provisions relating to selection by the Secretary for former provisions 
relating to agreements with institutions of higher education.


                    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 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 1051 of this title.


                    Effective Date of 1992 Amendment

    Amendment by Pub. L. 102-325 effective Oct. 1, 1992, see section 2 
of Pub. L. 102-325, set out as a note under section 1001 of this title.

                  Section Referred to in Other Sections

    This section is referred to in section 1091a of this title.
