
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 38USC3698]

 
                      TITLE 38--VETERANS' BENEFITS
 
               PART III--READJUSTMENT AND RELATED BENEFITS
 
           CHAPTER 36--ADMINISTRATION OF EDUCATIONAL BENEFITS
 
                     SUBCHAPTER III--EDUCATION LOANS
 
Sec. 3698. Eligibility for loans; amount and conditions of 
        loans; interest rate on loans
        
    (a)(1) Subject to paragraph (2) of this subsection, each eligible 
veteran shall be entitled to a loan under this subchapter (if the 
program of education is pursued in a State) in an amount determined 
under, and subject to the conditions specified in, subsection (b)(1) of 
this section if the veteran satisfies the requirements set forth in 
subsection (c) of this section and the criteria established under 
subsection (g) of this section.
    (2) Except in the case of a veteran to whom section 3462(a)(2) of 
this title is applicable, no loan may be made under this subchapter 
after September 30, 1981.
    (b)(1) Subject to paragraph (3) of this subsection, the amount of 
the loan to which an eligible veteran shall be entitled under this 
subchapter for any academic year shall be equal to the amount needed by 
such veteran to pursue a program of education at the institution at 
which the veteran is enrolled, as determined under paragraph (2) of this 
subsection.
    (2)(A) The amount needed by a veteran to pursue a program of 
education at an institution for any academic year shall be determined by 
subtracting (i) the total amount of financial resources (as defined in 
subparagraph (B) of this paragraph) available to the veteran which may 
be reasonably expected to be expended by such veteran for educational 
purposes in any year from (ii) the actual cost of attendance (as defined 
in subparagraph (C) of this paragraph) at the institution in which such 
veteran is enrolled.
    (B) The term ``total amount of financial resources'' of any veteran 
for any year means the total of the following:
        (i) The annual adjusted effective income of the veteran less 
    Federal income tax paid or payable by such veteran with respect to 
    such income.
        (ii) The amount of cash assets of the veteran.
        (iii) The amount of financial assistance received by the veteran 
    under the provisions of title IV of the Higher Education Act of 1965 
    (20 U.S.C. 1070 et seq.).
        (iv) Educational assistance received by the veteran under this 
    title other than under this subchapter.
        (v) Financial assistance received by the veteran under any 
    scholarship or grant program other than those specified in clauses 
    (iii) and (iv).

    (C) The term ``actual cost of attendance'' means, subject to such 
regulations as the Secretary may provide, the actual per-student charges 
for tuition, fees, room and board (or expenses related to reasonable 
commuting), books, and an allowance for such other expenses as the 
Secretary determines by regulation to be reasonably related to 
attendance at the institution at which the veteran is enrolled.
    (3) The aggregate of the amounts any veteran may borrow under this 
subchapter may not exceed $376 multiplied by the number of months such 
veteran is entitled to receive educational assistance under section 3461 
of this title, but not in excess of $2,500 in any one regular academic 
year.
    (c) An eligible veteran shall be entitled to a loan under this 
subchapter if such veteran--
        (1) is in attendance at an educational institution on at least a 
    half-time basis and (A) is enrolled in a course leading to a 
    standard college degree, or (B) is enrolled in a course, the 
    completion of which requires six months or longer, leading to an 
    identified and predetermined professional or vocational objective, 
    except that the Secretary may waive the requirements of subclause 
    (B) of this clause, in whole or in part, if the Secretary 
    determines, pursuant to regulations which the Secretary shall 
    prescribe, it to be in the interest of the eligible veteran and the 
    Federal Government;
        (2) enters into an agreement with the Secretary meeting the 
    requirements of subsection (d) of this section; and
        (3) satisfies any criteria established under subsection (g) of 
    this section.

No loan shall be made under this subchapter to an eligible veteran 
pursuing a program of correspondence, or apprenticeship or other on-job 
training.
    (d) Any agreement between the Secretary and a veteran under this 
subchapter--
        (1) shall include a note or other written obligation which 
    provides for repayment to the Secretary of the principal amount of, 
    and payment of interest on, the loan in installments (A) over a 
    period beginning nine months after the date on which the borrower 
    ceases to be at least a half-time student and ending ten years and 
    nine months after such date, or (B) over such shorter period as the 
    Secretary may have prescribed under subsection (g) of this section;
        (2) shall include provision for acceleration of repayment of all 
    or any part of the loan, without penalty, at the option of the 
    borrower;
        (3) shall provide that the loan shall bear interest, on the 
    unpaid balance of the loan, at a rate prescribed by the Secretary, 
    at the time the loan is contracted for which rate shall be 
    comparable to the rate of interest charged students at such time on 
    loans insured by the Secretary of Education under part B of title IV 
    of the Higher Education Act of 1965, but in no event shall the rate 
    so prescribed by the Secretary exceed the rate charged students on 
    such insured loans, and shall provide that no interest shall accrue 
    prior to the beginning date of repayment; and
        (4) shall provide that the loan shall be made without security 
    and without endorsement.

    (e)(1) Except as provided in paragraph (2) of this subsection, 
whenever the Secretary determines that a default has occurred on any 
loan made under this subchapter, the Secretary shall declare an 
overpayment, and such overpayment shall be recovered from the veteran 
concerned in the same manner as any other debt due the United States.
    (2) If a veteran who has received a loan under this section dies or 
becomes permanently and totally disabled, then the Secretary shall 
discharge the veteran's liability on such loan by repaying the amount 
owed on such loan.
    (f) Payment of a loan made under this section shall be drawn in 
favor of the eligible veteran and mailed promptly to the educational 
institution in which such veteran is enrolled. Such institution shall 
deliver such payment to the eligible veteran as soon as practicable 
after receipt thereof. Upon delivery of such payment to the eligible 
veteran, such educational institution shall promptly submit to the 
Secretary a certification, on such form as the Secretary shall 
prescribe, of such delivery, and such delivery shall be deemed to be an 
advance payment under section 3680(d)(4) of this title for purposes of 
section 3684(b) of this title.
    (g)(1) The Secretary shall conduct, on a continuing basis, a review 
of the default experience with respect to loans made under this section.
    (2)(A) To ensure that loans are made under this section on the basis 
of financial need directly related to the costs of education, the 
Secretary may, by regulation, establish (i) criteria for eligibility for 
such loans, in addition to the criteria and requirements prescribed by 
subsections (c) and (d) of this section, in order to limit eligibility 
for such loans to eligible veterans attending educational institutions 
with relatively high rates of tuition and fees, and (ii) criteria under 
which the Secretary may prescribe a repayment period for certain types 
of loans made under this section that is shorter than the repayment 
period otherwise applicable under subsection (d)(1)(A) of this section. 
Criteria established by the Secretary under clause (i) of the preceding 
sentence may include a minimum amount of tuition and fees that an 
eligible veteran may pay in order to be eligible for such a loan (except 
that any such criterion shall not apply with respect to a loan for which 
the veteran is eligible as a result of an extension of the period of 
eligibility of such veteran for loans under this section provided for by 
section 3462(a)(2) of this title).
    (B) In prescribing regulations under subparagraph (A) of this 
paragraph, the Secretary shall take into consideration information 
developed in the course of the review required by paragraph (1) of this 
subsection.
    (C) Regulations may be prescribed under subparagraph (A) of this 
paragraph only after opportunity has been afforded for public comment 
thereon.

(Added Pub. L. 93-508, title III, Sec. 301(a), Dec. 3, 1974, 88 Stat. 
1589, Sec. 1798; amended Pub. L. 94-502, title V, Secs. 502(a), 
513(a)(23), Oct. 15, 1976, 90 Stat. 2399, 2403; Pub. L. 95-202, title I, 
Sec. 104(3), title II, Sec. 202, Nov. 23, 1977, 91 Stat. 1435, 1438; 
Pub. L. 95-476, title II, Sec. 201, Oct. 18, 1978, 92 Stat. 1502; Pub. 
L. 96-466, title II, Secs. 203(4), 213(4), title VI, Secs. 601(h), 
603(b), title VIII, Sec. 801(g), Oct. 17, 1980, 94 Stat. 2189, 2191, 
2208, 2209, 2216; Pub. L. 97-35, title XX, Sec. 2005(d), Aug. 13, 1981, 
95 Stat. 783; Pub. L. 97-295, Sec. 4(60), Oct. 12, 1982, 96 Stat. 1309; 
Pub. L. 97-306, title II, Sec. 208, Oct. 14, 1982, 96 Stat. 1436; Pub. 
L. 98-543, title II, Sec. 204(3), Oct. 24, 1984, 98 Stat. 2742; Pub. L. 
100-689, title I, Sec. 124(b), Nov. 18, 1988, 102 Stat. 4174; Pub. L. 
101-237, title IV, Sec. 423(b)(1)(A), Dec. 18, 1989, 103 Stat. 2092; 
Pub. L. 102-16, Sec. 5(a), Mar. 22, 1991, 105 Stat. 50; renumbered 
Sec. 3698 and amended Pub. L. 102-83, Sec. 5(a), (c)(1), Aug. 6, 1991, 
105 Stat. 406.)

                       References in Text

    The Higher Education Act of 1965, referred to in subsecs. 
(b)(2)(B)(iii) and (d)(3), is Pub. L. 89-329, Nov. 8, 1965, 79 Stat. 
1219, as amended. Title IV of the Higher Education Act of 1965 is 
classified generally to subchapter IV (Sec. 1070 et seq.) of chapter 28 
of Title 20, Education, and part C (Sec. 2751 et seq.) of subchapter I 
of chapter 34 of Title 42, The Public Health and Welfare. Part B of 
title IV of the Higher Education Act of 1965, is classified generally to 
Part B of subchapter IV (Sec. 1071 et seq.) of chapter 28 of Title 20. 
For complete classification of this Act to the Code, see Short Title 
note set out under section 1001 of Title 20 and Tables.


                               Amendments

    1991--Pub. L. 102-83, Sec. 5(a), renumbered section 1798 of this 
title as this section.
    Subsec. (a)(2). Pub. L. 102-83, Sec. 5(c)(1), substituted 
``3462(a)(2)'' for ``1662(a)(2)''.
    Subsec. (b)(3). Pub. L. 102-83, Sec. 5(c)(1), substituted ``3461'' 
for ``1661''.
    Subsec. (e)(3). Pub. L. 102-16 struck out par. (3) which read as 
follows: ``The Secretary shall submit to the appropriate committees of 
the Congress not later than December 31 of each year a report on the 
current results of the continuing review required by subsection (g)(1) 
of this section to be made regarding the default experience with respect 
to loans made under this section and any steps being taken to reduce 
default rates on such loans. Such report shall include--
        ``(A) data regarding the cumulative default experience, and the 
    default experience during the preceding fiscal year, with respect to 
    such loans; and
        ``(B) data regarding the default experience and default rate 
    with respect to loans made under this section.''
    Subsec. (f). Pub. L. 102-83, Sec. 5(c)(1), substituted 
``3680(d)(4)'' for ``1780(d)(4)'' and ``3684(b)'' for ``1784(b)''.
    Subsec. (g)(2)(A). Pub. L. 102-83, Sec. 5(c)(1), substituted 
``3462(a)(2)'' for ``1662(a)(2)''.
    1989--Subsecs. (b)(2)(C), (c) to (g). Pub. L. 101-237 substituted 
``Secretary'' for ``Administrator'' wherever appearing.
    1988--Subsec. (a)(1). Pub. L. 100-689, Sec. 124(b)(1), (2), 
substituted ``eligible veteran'' for ``eligible veteran and eligible 
person'', inserted ``(if the program of education is pursued in a 
State)'', and substituted ``veteran satisfies'' for ``veteran or person 
satisfies''.
    Subsec. (b)(1). Pub. L. 100-689, Sec. 124(b)(1), (3)(A), substituted 
``eligible veteran'' for ``eligible veteran or eligible person'', 
``needed by such veteran'' for ``needed by such veteran or person'', and 
``veteran is enrolled'' for ``veteran or person is enrolled''.
    Subsec. (b)(2)(A). Pub. L. 100-689, Sec. 124(b)(1), substituted ``a 
veteran'' for ``a veteran or person'', ``the veteran'' for ``the veteran 
or person'', and ``such veteran'' for ``such veteran or person'' in two 
places.
    Subsec. (b)(2)(B). Pub. L. 100-689, Sec. 124(b)(1), substituted in 
introductory text ``any veteran'' for ``any veteran or person'', in cl. 
(i) ``such veteran'' for ``such veteran or person'', and in cls. (i) to 
(v) ``the veteran'' for ``the veteran or person''.
    Subsec. (b)(2)(C). Pub. L. 100-689, Sec. 124(b)(1), substituted 
``the veteran'' for ``the veteran or person''.
    Subsec. (b)(3). Pub. L. 100-689, Sec. 124(b)(1), (3)(B), substituted 
``any veteran'' for ``any veteran or person'', ``such veteran'' for 
``such veteran or person'', and ``under section 1661'' for ``under 
section 1661 or subchapter II of chapter 35, respectively,''.
    Subsec. (c). Pub. L. 100-689, Sec. 124(b)(1), struck out ``or 
person'' after ``eligible veteran'' and after ``such veteran'' in 
introductory text and after ``eligible veteran'' in closing provisions.
    Subsec. (d). Pub. L. 100-689, Sec. 124(b)(1), substituted in 
introductory text ``a veteran'' for ``a veteran or person''.
    Subsec. (e)(1). Pub. L. 100-689, Sec. 124(b)(1), struck out ``or 
person'' after ``the veteran''.
    Subsec. (e)(2). Pub. L. 100-689, Sec. 124(b)(1), (4)(A), struck out 
``or person'' after ``a veteran'' and ``or person's'' after ``the 
veteran's''.
    Subsec. (e)(3)(B). Pub. L. 100-689, Sec. 124(b)(4)(B), amended 
subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: 
``data regarding the default experience and default rate with respect to 
(i) loans made under this section in connection with accelerated 
payments under section 1682A of this title, and (ii) other loans made 
under this section.''
    Subsec. (f). Pub. L. 100-689, Sec. 124(b)(5), struck out par. (2) 
designation, struck out par. (1) which read as follows: ``At the time of 
application by any eligible veteran for a loan under this section, such 
veteran shall assign to the benefit of the Veterans' Administration (for 
deposit in the Veterans' Administration Education Loan Fund established 
under section 1799 of this title) the amount of any accelerated payment 
to which such eligible veteran may become entitled from the 
Administrator and any matching contribution by a State or local 
governmental unit pursuant to section 1682A(b)(8) of this title in 
connection with the school term for which such veteran has applied.'', 
and struck out par. (3) which read as follows: ``For purposes of this 
subsection, the term `eligible veteran' includes eligible person as such 
term is defined in section 1701(a)(1) of this title.''
    Subsec. (g)(2)(A). Pub. L. 100-689, Sec. 124(b)(6), substituted 
``eligible veterans'' for ``eligible veterans and eligible persons'' and 
``eligible veteran'' for ``eligible veteran or eligible person''.
    1984--Subsec. (b)(3). Pub. L. 98-543 substituted ``$376'' for 
``$342''.
    1982--Subsec. (b)(2)(B)(iii). Pub. L. 97-295 substituted ``(20 
U.S.C. 1070 et seq.)'' for ``, as amended''.
    Subsec. (e)(3). Pub. L. 97-306, Sec. 208(1), struck out ``in maximum 
feasible detail'' after ``Such report shall include''.
    Subsec. (e)(3)(B). Pub. L. 97-306, Sec. 208(3), substituted 
provisions requiring data regarding the default experience and default 
rate with respect to loans made under this section in connection with 
accelerated payments under section 1682A of this title, and other loans 
made under this section, for provisions which had required data 
regarding the default experience and default rate at each educational 
institution with respect to loans made under this section in connection 
with accelerated payments under section 1682A of this title, and with 
respect to other loans made under this section.
    Subsec. (e)(3)(C). Pub. L. 97-306, Sec. 208(3), struck out subpar. 
(C) which had required comparisons of the collective default experience 
and default rates with respect to such loans at all such institutions to 
the default experience and default rates with respect to such loans at 
each such institution.
    1981--Subsec. (a). Pub. L. 97-35 designated existing provisions as 
par. (1), inserted reference to par. (2), and added par. (2).
    1980--Subsec. (b)(3). Pub. L. 96-466, Sec. 213(4), substituted 
``$342'' for ``$327''.
    Pub. L. 96-466, Sec. 203(4), substituted ``$327'' for ``$311''.
    Subsec. (c). Pub. L. 96-466, Sec. 603(b), substituted ``or 
apprenticeship or other on-job training'' for ``flight, apprentice, or 
other on-job, or PREP training'' in last sentence.
    Subsec. (d)(3). Pub. L. 96-466, Sec. 801(g), substituted ``Secretary 
of Education'' for ``Commissioner of Education, Department of Health, 
Education, and Welfare''.
    Subsec. (f)(2). Pub. L. 96-466, Sec. 601(h), substituted ``section 
1780(d)(4)'' for ``section 1780(d)(5)''.
    1978--Subsec. (a). Pub. L. 95-476, Sec. 201(1), inserted ``and the 
criteria established under subsection (g) of this section'' after 
``subsection (c) of this section''.
    Subsec. (c)(3). Pub. L. 95-476, Sec. 201(2)(C), added par. (3).
    Subsec. (d)(1). Pub. L. 95-476, Sec. 201(3), substituted 
``installments (A) over'' for ``installments over'' and added cl. (B).
    Subsec. (e)(3). Pub. L. 95-476, Sec. 201(4), substituted provisions 
requiring the Administrator to submit to the appropriate committees of 
Congress not later than Dec. 31 of each year a report on the results of 
the continuing default experience review required by subsec. (g)(1) of 
this section and specifying the data to be included in each such report 
for provisions requiring the Administrator to submit to the Committees 
on Veterans' Affairs of the Senate and the House of Representatives, not 
later than one year after Dec. 3, 1974, and annually thereafter, 
separate default experience reports regarding accelerated and non-
accelerated repayment loans.
    Subsec. (f)(3). Pub. L. 95-476, Sec. 201(5), substituted ``section 
1701(a)(1)'' for ``section 1701(1)''.
    Subsec. (g). Pub. L. 95-476, Sec. 201(6), added subsec. (g).
    1977--Subsec. (b)(3). Pub. L. 95-202, Secs. 104(3), 202(1), 
substituted ``$311'' for ``$292'' and ``$2,500'' for ``$1,500''.
    Subsec. (c)(1). Pub. L. 95-202, Sec. 202(2)(A), authorized the 
Administrator to waive the requirements of subclause (B), in whole or in 
part, if the Administrator determines, pursuant to regulations which the 
Administrator prescribes, that it is in the interest of the eligible 
veteran and the Federal Government.
    Subsec. (c)(2), (3). Pub. L. 95-202, Sec. 202(2)(B), redesignated 
par. (3) as (2). Former par. (2), directing that the agreement include a 
provision for acceleration of repayment of all or any part of the loan, 
without penalty, at the option of the borrower, was struck out.
    Subsec. (e)(3). Pub. L. 95-202, Sec. 202(3), inserted ``separately 
with respect to loans made under this section the repayment of which is 
accelerated under section 1682A of this title and loans made under this 
section the repayment of which is not so accelerated'' after ``default 
rate at all such institutions''.
    Subsec. (f). Pub. L. 95-202, Sec. 202(4), added subsec. (f).
    1976--Subsec. (b)(1). Pub. L. 94-502, Sec. 513(a)(23), substituted 
``the veteran or person is enrolled'' for ``he is enrolled''.
    Subsec. (b)(3). Pub. L. 94-502, Sec. 502(a)(1), substituted ``$292'' 
for ``$270'' and ``$1,500'' for ``$600''.
    Subsec. (d)(3). Pub. L. 94-502, Sec. 502(a)(2), substituted 
provision changing the interest rate on loans to a rate comparable to 
the rate of interest charged students on loans insured by the 
Commissioner of Education, Department of Health, Education, and Welfare 
under part B of title IV of the Higher Education Act of 1965 for 
provision which authorized a rate which was to be determined by the 
Secretary, with the concurrence of the Secretary of the Treasury, taking 
into consideration the current average market yield on outstanding 
marketable obligations of the United States.
    Subsec. (e)(1). Pub. L. 94-502, Sec. 513(a)(23), substituted ``the 
Administrator shall declare'' for ``he shall declare''.


                    Effective Date of 1984 Amendment

    Amendment by Pub. L. 98-543 effective Oct. 1, 1984, see section 205 
of Pub. L. 98-543, set out as a note under section 3108 of this title.


                    Effective Date of 1981 Amendment

    Amendment by Pub. L. 97-35 effective Oct. 1, 1981, except as 
otherwise provided, see section 2006 of Pub. L. 97-35, set out as a note 
under section 3231 of this title.


                    Effective Date of 1980 Amendment

    Amendment by sections 203(4) and 213(4) of Pub. L. 96-466 effective 
Oct. 1, 1980, and Jan. 1, 1981, respectively, see section 802(b) of Pub. 
L. 96-466, set out as a note under section 3482 of this title.
    Amendment by sections 601(h) and 603(b) of Pub. L. 96-466 effective 
Oct. 1, 1980, except that amendment by section 603(b) of Pub. L. 96-466 
not applicable to any person receiving educational assistance under 
chapter 34 or 35 of this title on Sept. 1, 1980, for the pursuit of a 
program of education in which such person is enrolled on that date, for 
as long as such person continuously thereafter is so enrolled and meets 
the requirements of eligibility for such assistance for the pursuit of 
such program under the provisions of such chapter and chapter 36 of this 
title as in effect on that date, see section 802(f) of Pub. L. 96-466, 
set out as an Effective Date note under section 5314 of this title.
    Amendment by section 801(g) of Pub. L. 96-466 effective Oct. 1, 
1980, see section 802(h) of Pub. L. 96-466, set out as an Effective Date 
note under section 3452 of this title.


                    Effective Date of 1978 Amendment

    Amendment of section by Pub. L. 95-476 effective Oct. 18, 1978, see 
section 205(a) of Pub. L. 95-476, set out as a note under section 2303 
of this title.


                    Effective Date of 1977 Amendment

    Amendment by section 114(3) of Pub. L. 95-202 effective 
retroactively to Oct. 1, 1977, and amendment by section 202 of Pub. L. 
95-202 effective Jan. 1, 1978, see section 501 of Pub. L. 95-202, set 
out as a note under section 101 of this title.


                    Effective Date of 1976 Amendment

    Section 502(b) of Pub. L. 94-502 provided that: ``The amendments 
made by subsection (a) [amending this section] shall be effective with 
respect to loans made under section 1798 [now 3698] of title 38, United 
States Code, on and after October 1, 1976.''
    Amendment by sections 502 and 513(a)(23) of Pub. L. 94-502 effective 
Oct. 1, 1976, and Oct. 15, 1976, respectively, see section 703(a), (b) 
of Pub. L. 94-502, set out as an Effective Date note under section 3693 
of this title.


                    Effective Date of 1974 Amendment

    Section 502 of Pub. L. 93-508 provided that: ``Title III of this Act 
[enacting this section and sections 1686 [repealed], 1737 [repealed], 
and 1799 [now 3699] of this title] shall become effective on January 1, 
1975, except that eligible persons shall, upon application, be entitled 
(and all such persons shall be notified by the Administrator of 
Veterans' Affairs of such entitlement) to a loan under the new 
subchapter III of chapter 36 of title 38, United States Code, as added 
by section 301 of this Act, the terms of which take into account the 
full amount of the actual cost of attendance (as defined in section 
1798(b)(2)(C) [now 3698(b)(2)(C)] of such title) which such persons 
incurred for the academic year beginning on or about September 1, 
1974.''

                  Section Referred to in Other Sections

    This section is referred to in section 3699 of this title.
