
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 42USC12604]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
               CHAPTER 129--NATIONAL AND COMMUNITY SERVICE
 
    SUBCHAPTER I--NATIONAL AND COMMUNITY SERVICE STATE GRANT PROGRAM
 
  Division D--National Service Trust and Provision of National Service 
                           Educational Awards
 
Sec. 12604. Disbursement of national service educational awards


(a) In general

    Amounts in the Trust shall be available--
        (1) to repay student loans in accordance with subsection (b) of 
    this section;
        (2) to pay all or part of the cost of attendance at an 
    institution of higher education in accordance with subsection (c) of 
    this section;
        (3) to pay expenses incurred in participating in an approved 
    school-to-work program in accordance with subsection (d) of this 
    section; and
        (4) to pay interest expenses in accordance with regulations 
    prescribed pursuant to subsection (e) of this section.

(b) Use of educational award to repay outstanding student loans

               (1) Application by eligible individuals

        An eligible individual under section 12602 of this title who 
    desires to apply the national service educational award of the 
    individual to the repayment of qualified student loans shall submit, 
    in a manner prescribed by the Corporation, an application to the 
    Corporation that--
            (A) identifies, or permits the Corporation to identify 
        readily, the holder or holders of such loans;
            (B) indicates, or permits the Corporation to determine 
        readily, the amounts of principal and interest outstanding on 
        the loans;
            (C) specifies, if the outstanding balance is greater than 
        the amount disbursed under paragraph (2), which of the loans the 
        individual prefers to be paid by the Corporation; and
            (D) contains or is accompanied by such other information as 
        the Corporation may require.

                   (2) Disbursement of repayments

        Upon receipt of an application from an eligible individual of an 
    application that complies with paragraph (1), the Corporation shall, 
    as promptly as practicable consistent with paragraph (5), disburse 
    the amount of the national service educational award that the 
    eligible individual has earned. Such disbursement shall be made by 
    check or other means that is payable to the holder of the loan and 
    requires the endorsement or other certification by the eligible 
    individual.

                (3) Application of disbursed amounts

        If the amount disbursed under paragraph (2) is less than the 
    principal and accrued interest on any qualified student loan, such 
    amount shall be applied according to the specified priorities of the 
    individual.

                       (4) Reports by holders

        Any holder receiving a loan payment pursuant to this subsection 
    shall submit to the Corporation such information as the Corporation 
    may require to verify that such payment was applied in accordance 
    with this subsection and any regulations prescribed to carry out 
    this subsection.

                   (5) Notification of individual

        The Corporation upon disbursing the national service educational 
    award, shall notify the individual of the amount paid for each 
    outstanding loan and the date of payment.

                 (6) Authority to aggregate payments

        The Corporation may, by regulation, provide for the aggregation 
    of payments to holders under this subsection.

               (7) ``Qualified student loans'' defined

        As used in this subsection, the term ``qualified student loans'' 
    means--
            (A) any loan made, insured, or guaranteed pursuant to title 
        IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq. 
        [and 42 U.S.C. 2751 et seq.]), other than a loan to a parent of 
        a student pursuant to section 428B of such Act (20 U.S.C. 1078-
        2); and
            (B) any loan made pursuant to title VII or VIII of the 
        Public Health Service Act [42 U.S.C. 292 et seq., 296 et seq.].

                       (8) ``Holder'' defined

        As used in this subsection, the term ``holder'' with respect to 
    any eligible loan means the original lender or, if the loan is 
    subsequently sold, transferred, or assigned to some other person, 
    and such other person acquires a legally enforceable right to 
    receive payments from the borrower, such other person.

(c) Use of educational awards to pay current educational expenses

               (1) Application by eligible individual

        An eligible individual under section 12602 of this title who 
    desires to apply the individual's national service educational award 
    to the payment of current full-time or part-time educational 
    expenses shall, on a form prescribed by the Corporation, submit an 
    application to the institution of higher education in which the 
    student will be enrolled that contains such information as the 
    Corporation may require to verify the individual's eligibility.

       (2) Submission of requests for payment by institutions

        An institution of higher education that receives one or more 
    applications that comply with paragraph (1) shall submit to the 
    Corporation a statement, in a manner prescribed by the Corporation, 
    that--
            (A) identifies each eligible individual filing an 
        application under paragraph (1) for a disbursement of the 
        individual's national service educational award under this 
        subsection;
            (B) specifies the amounts for which such eligible 
        individuals are, consistent with paragraph (6), qualified for 
        disbursement under this subsection;
            (C) certifies that--
                (i) the institution of higher education has in effect a 
            program participation agreement under section 487 of the 
            Higher Education Act of 1965 (20 U.S.C. 1094);
                (ii) the institution's eligibility to participate in any 
            of the programs under title IV of such Act (20 U.S.C. 1070 
            et seq. [and 42 U.S.C. 2751 et seq.]) has not been limited, 
            suspended, or terminated; and
                (iii) individuals using national service educational 
            awards received under this division to pay for educational 
            costs do not comprise more than 15 percent of the total 
            student population of the institution; and

            (D) contains such provisions concerning financial compliance 
        as the Corporation may require.

                    (3) Disbursement of payments

        Upon receipt of a statement from an institution of higher 
    education that complies with paragraph (2), the Corporation shall, 
    subject to paragraph (4), disburse the total amount of the national 
    service educational awards for which eligible individuals who have 
    submitted applications to that institution under paragraph (1) are 
    scheduled to receive. Such disbursement shall be made by check or 
    other means that is payable to the institution and requires the 
    endorsement or other certification by the eligible individual.

                 (4) Multiple disbursements required

        The total amount required to be disbursed to an institution of 
    higher education under paragraph (3) for any period of enrollment 
    shall be disbursed by the Corporation in 2 or more installments, 
    none of which exceeds \1/2\ of such total amount. The interval 
    between the first and second such installment shall not be less than 
    \1/2\ of such period of enrollment, except as necessary to permit 
    the second installment to be paid at the beginning of the second 
    semester, quarter, or similar division of such period of enrollment.

                          (5) Refund rules

        The Corporation shall, by regulation, provide for the refund to 
    the Corporation (and the crediting to the national service 
    educational award of an eligible individual) of amounts disbursed to 
    institutions for the benefit of eligible individuals who withdraw or 
    otherwise fail to complete the period of enrollment for which the 
    assistance was provided. Such regulations shall be consistent with 
    the fair and equitable refund policies required of institutions 
    pursuant to section 484B of the Higher Education Act of 1965 (20 
    U.S.C. 1091b). Amounts refunded to the Trust pursuant to this 
    paragraph may be used by the Corporation to fund additional approved 
    national service positions under division C of this subchapter.

                          (6) Maximum award

        The portion of an eligible individual's total available national 
    service educational award that may be disbursed under this 
    subsection for any period of enrollment shall not exceed the 
    difference between--
            (A) the eligible individual's cost of attendance for such 
        period of enrollment, determined in accordance with section 472 
        of the Higher Education Act of 1965 (20 U.S.C. 1087ll); and
            (B) the sum of--
                (i) the student's estimated financial assistance for 
            such period under part A of title IV of such Act (20 U.S.C. 
            1070 et seq.); and
                (ii) the student's veterans' education benefits, 
            determined in accordance with section 480(c) of such Act (20 
            U.S.C. 1087vv(c)).

(d) Use of educational award to participate in approved school-to-work 
        programs

    The Corporation shall by regulation provide for the payment of 
national service educational awards to permit eligible individuals to 
participate in school-to-work programs approved by the Secretaries of 
Labor and Education.

(e) Interest payments during forbearance on loan repayment

    The Corporation shall provide by regulation for the payment on 
behalf of an eligible individual of interest that accrues during a 
period for which such individual has obtained forbearance in the 
repayment of a qualified student loan (as defined in subsection (b)(6) 
\1\ of this section), if the eligible individual successfully completes 
the individual's required term of service (as determined under section 
12602(b) of this title). Such regulations shall be prescribed after 
consultation with the Secretary of Education.
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    \1\ So in original. Probably should be subsection ``(b)(7)''.
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(f) Exception

    With the approval of the Director, an approved national service 
program funded under section 12571 of this title, may offer participants 
the option of waiving their right to receive a national service 
educational award in order to receive an alternative post-service 
benefit funded by the program entirely with non-Federal funds.

(g) ``Institution of higher education'' defined

    Notwithstanding section 12511 of this title, for purposes of this 
section the term ``institution of higher education'' has the meaning 
provided by section 102 of the Higher Education Act of 1965 [20 U.S.C. 
1002].

(Pub. L. 101-610, title I, Sec. 148, as added Pub. L. 103-82, title I, 
Sec. 102(a), Sept. 21, 1993, 107 Stat. 820; amended Pub. L. 105-244, 
title I, Sec. 102(c)(2), Oct. 7, 1998, 112 Stat. 1622.)

                       References in Text

    The Higher Education Act of 1965, referred to in subsecs. (b)(7)(A) 
and (c)(2)(C)(ii), (6)(B)(i), is Pub. L. 89-329, Nov. 8, 1965, 79 Stat. 
1219, as amended. Title IV of the Act 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 this 
title. Part A of title IV of the Act is classified generally to part A 
(Sec. 1070 et seq.) of subchapter IV 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.
    The Public Health Service Act, referred to in subsec. (b)(7)(B), is 
act July 1, 1944, ch. 373, 58 Stat. 682, as amended. Titles VII and VIII 
of the Act are classified generally to subchapters V (Sec. 292 et seq.) 
and VI (Sec. 296 et seq.), respectively, of chapter 6A of this title. 
For complete classification of this Act to the Code, see Short Title 
note set out under section 201 of this title and Tables.


                            Prior Provisions

    A prior section 148 of Pub. L. 101-610 was classified to section 
12578 of this title prior to the general amendment of subtitle D of 
title I of Pub. L. 101-610 [former part D of this subchapter] by Pub. L. 
103-82, Sec. 102(a).


                               Amendments

    1998--Subsec. (g). Pub. L. 105-244 substituted ``section 102 of the 
Higher Education Act of 1965'' for ``section 481(a) of the Higher 
Education Act of 1965 (20 U.S.C. 1088(a))''.


                    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 Title 20, Education.

                  Section Referred to in Other Sections

    This section is referred to in section 12601 of this title.
