
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: 42USC297b]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
                    CHAPTER 6A--PUBLIC HEALTH SERVICE
 
              SUBCHAPTER VI--NURSING WORKFORCE DEVELOPMENT
 
                          Part E--Student Loans
 
Sec. 297b. Loan provisions


(a) Maximum amount per individual per year; preference to first year 
        students

    The total of the loans for any academic year (or its equivalent, as 
determined under regulations of the Secretary) made by schools of 
nursing from loan funds established pursuant to agreements under this 
subpart \1\ may not exceed $2,500 in the case of any student, except 
that for the final two academic years of the program involved, such 
total may not exceed $4,000. The aggregate of the loans for all years 
from such funds may not exceed $13,000 in the case of any student. In 
the granting of such loans, a school shall give preference to licensed 
practical nurses, to persons with exceptional financial need, and to 
persons who enter as first-year students after enactment of this 
subchapter.
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    \1\ See References in Text note below.
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(b) Terms and conditions

    Loans from any such student loan fund by any school shall be made on 
such terms and conditions as the school may determine; subject, however, 
to such conditions, limitations, and requirements as the Secretary may 
prescribe (by regulation or in the agreement with the school) with a 
view to preventing impairment of the capital of such fund to the maximum 
extent practicable in the light of the objective of enabling the student 
to complete his course of study; and except that--
        (1) such a loan may be made only to a student who (A) is in need 
    of the amount of the loan to pursue a full-time or half-time course 
    of study at the school leading to a baccalaureate or associate 
    degree in nursing or an equivalent degree, or a diploma in nursing, 
    or a graduate degree in nursing, (B) is capable, in the opinion of 
    the school, of maintaining good standing in such course of study, 
    and (C) with respect to any student enrolling in the school after 
    June 30, 1986, is of financial need (as defined in regulations 
    issued by the Secretary);; \2\
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    \2\ So in original.
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        (2) such a loan shall be repayable in equal or graduated 
    periodic installments (with the right of the borrower to accelerate 
    repayment) over the ten-year period which begins nine months after 
    the student ceases to pursue a full-time or half-time course of 
    study at a school of nursing, excluding from such 10-year period all 
    (A) periods (up to three years) of (i) active duty performed by the 
    borrower as a member of a uniformed service, or (ii) service as a 
    volunteer under the Peace Corps Act [22 U.S.C. 2501 et seq.], (B) 
    periods (up to ten years) during which the borrower is pursuing a 
    full-time or half-time course of study at a collegiate school of 
    nursing leading to baccalaureate degree in nursing or an equivalent 
    degree, or to graduate degree in nursing, or is otherwise pursuing 
    advanced professional training in nursing (or training to be a nurse 
    anesthetist), and (C) such additional periods under the terms of 
    paragraph (8) of this subsection;
        (3) in the case of a student who received such a loan before 
    September 29, 1979, an amount up to 85 per centum of any such loan 
    made before such date (plus interest thereon) shall be canceled for 
    full-time employment as a professional nurse (including teaching in 
    any of the fields of nurse training and service as an administrator, 
    supervisor, or consultant in any of the fields of nursing) in any 
    public or nonprofit private agency, institution, or organization 
    (including neighborhood health centers), at the rate of 15 per 
    centum of the amount of such loan (plus interest) unpaid on the 
    first day of such service for each of the first, second, and third 
    complete year of such service, and 20 per centum of such amount 
    (plus interest) for each complete fourth and fifth year of such 
    service;
        (4) the liability to repay the unpaid balance of such loan and 
    accrued interest thereon shall be canceled upon the death of the 
    borrower, or if the Secretary determines that he has become 
    permanently and totally disabled;
        (5) such a loan shall bear interest on the unpaid balance of the 
    loan, computed only for periods during which the loan is repayable, 
    at the rate of 5 percent per annum;
        (6) such a loan shall be made without security or endorsement, 
    except that if the borrower is a minor and the note or other 
    evidence of obligation executed by him would not, under the 
    applicable law, create a binding obligation, either security or 
    endorsement may be required;
        (7) no note or other evidence of any such loan may be 
    transferred or assigned by the school making the loan except that, 
    if the borrower transfers to another school participating in the 
    program under this subpart \1\ such note or other evidence of a loan 
    may be transferred to such other school; and
        (8) pursuant to uniform criteria established by the Secretary, 
    the repayment period established under paragraph (2) for any student 
    borrower who during the repayment period failed to make consecutive 
    payments and who, during the last 12 months of the repayment period, 
    has made at least 12 consecutive payments may be extended for a 
    period not to exceed 10 years.

(c) Cancellation

    Where all or any part of a loan, or interest, is canceled under this 
section, the Secretary shall pay to the school an amount equal to the 
school's proportionate share of the canceled portion, as determined by 
the Secretary.

(d) Installments

    Any loan for any year by a school from a student loan fund 
established pursuant to an agreement under this subpart \1\ shall be 
made in such installments as may be provided in regulations of the 
Secretary or such agreement and, upon notice to the Secretary by the 
school that any recipient of a loan is failing to maintain satisfactory 
standing, any or all further installments of his loan shall be withheld, 
as may be appropriate.

(e) Availability to eligible students in need

    An agreement under this subpart \1\ with any school shall include 
provisions designed to make loans from the student loan fund established 
thereunder reasonably available (to the extent of the available funds in 
such fund) to all eligible students in the school in need thereof.

(f) Penalty for late payment

    Subject to regulations of the Secretary and in accordance with this 
section, a school shall assess a charge with respect to a loan from the 
loan fund established pursuant to an agreement under this subpart \1\ 
for failure of the borrower to pay all or any part of an installment 
when it is due and, in the case of a borrower who is entitled to 
deferment of the loan under subsection (b)(2) of this section or 
cancellation of part or all of the loan under subsection (b)(3) of this 
section, for any failure to file timely and satisfactory evidence for 
such entitlement. No such charge may be made if the payment of such 
installment or the filing of such evidence is made within 60 days after 
the date on which such installment or filing is due. The amount of any 
such charge may not exceed an amount equal to 6 percent of the amount of 
such installment. The school may elect to add the amount of any such 
charge to the principal amount of the loan as of the first day after the 
day on which such installment or evidence was due, or to make the amount 
of the charge payable to the school not later than the due date of the 
next installment after receipt by the borrower of notice of the 
assessment of the charge.

(g) Minimum monthly repayment

    A school may provide in accordance with regulations of the 
Secretary, that during the repayment period of a loan from a loan fund 
established pursuant to an agreement under this subpart \1\ payments of 
principal and interest by the borrower with respect to all the 
outstanding loans made to him from loan funds so established shall be at 
a rate equal to not less than $40 per month.

(h) Loan cancellation

    Notwithstanding the amendment made by section 6(b) of the Nurse 
Training Act of 1971 to this section--
        (A) any person who obtained one or more loans from a loan fund 
    established under this subpart, \1\ who before November 18, 1971, 
    became eligible for cancellation of all or part of such loans 
    (including accrued interest) under this section (as in effect on the 
    day before such date), and who on such date was not engaged in a 
    service for which loan cancellation was authorized under this 
    section (as so in effect), may at any time elect to receive such 
    cancellation in accordance with this subsection (as so in effect); 
    and
        (B) in the case of any person who obtained one or more loans 
    from a loan fund established under this subpart \1\ and who on such 
    date was engaged in a service for which cancellation of all or part 
    of such loans (including accrued interest) was authorized under this 
    section (as so in effect), this section (as so in effect) shall 
    continue to apply to such person for purposes of providing such loan 
    cancellation until he terminates such service.

Nothing in this subsection shall be construed to prevent any person from 
entering into an agreement for loan cancellation under subsection (h) 
\1\ of this section (as amended by section 6(b)(2) of the Nurse Training 
Act of 1971).

(i) Loan repayment

    Upon application by a person who received, and is under an 
obligation to repay, any loan made to such person as a nursing student, 
the Secretary may undertake to repay (without liability to the 
applicant) all or any part of such loan, and any interest or portion 
thereof outstanding thereon, upon his determination, pursuant to 
regulations establishing criteria therefor, that the applicant--
        (1) failed to complete the nursing studies with respect to which 
    such loan was made;
        (2) is in exceptionally needy circumstances; and
        (3) has not resumed, or cannot reasonably be expected to resume, 
    such nursing studies within two years following the date upon which 
    the applicant terminated the studies with respect to which such loan 
    was made.

(j) Collection by Secretary of loan in default; preconditions and 
        procedures applicable

    The Secretary is authorized to attempt to collect any loan which was 
made under this subpart,\1\ which is in default, and which was referred 
to the Secretary by a school of nursing with which the Secretary has an 
agreement under this subpart,\1\ on behalf of that school under such 
terms and conditions as the Secretary may prescribe (including 
reimbursement from the school's student loan fund for expenses the 
Secretary may reasonably incur in attempting collection), but only if 
the school has complied with such requirements as the Secretary may 
specify by regulation with respect to the collection of loans under this 
subpart.\1\ A loan so referred shall be treated as a debt subject to 
section 5514 of title 5. Amounts collected shall be deposited in the 
school's student loan fund. Whenever the Secretary desires the 
institution of a civil action regarding any such loan, the Secretary 
shall refer the matter to the Attorney General for appropriate action.

(k) Redesignated (j)

(l) Elimination of statute of limitation for loan collections

                             (1) Purpose

        It is the purpose of this subsection to ensure that obligations 
    to repay loans under this section are enforced without regard to any 
    Federal or State statutory, regulatory, or administrative limitation 
    on the period within which debts may be enforced.

                           (2) Prohibition

        Notwithstanding any other provision of Federal or State law, no 
    limitation shall terminate the period within which suit may be 
    filed, a judgment may be enforced, or an offset, garnishment, or 
    other action may be initiated or taken by a school of nursing that 
    has an agreement with the Secretary pursuant to section 297a of this 
    title that is seeking the repayment of the amount due from a 
    borrower on a loan made under this subpart \1\ after the default of 
    the borrower on such loan.

(July 1, 1944, ch. 373, title VIII, Sec. 836, formerly Sec. 823, as 
added Pub. L. 88-581, Sec. 2, Sept. 4, 1964, 78 Stat. 914; amended Pub. 
L. 89-290, Sec. 4(g)(2), Oct. 22, 1965, 79 Stat. 1058; Pub. L. 90-490, 
title II, Sec. 222(b), (c)(1), Aug. 16, 1968, 82 Stat. 783, 784; Pub. L. 
92-158, Sec. 6(a), (b)(1), (e), Nov. 18, 1971, 85 Stat. 475, 476, 478; 
renumbered Sec. 836 and amended Pub. L. 94-63, title IX, Secs. 936(b), 
941(h)(1), (2), (5), (i)(1), July 29, 1975, 89 Stat. 363, 365; Pub. L. 
96-76, title I, Sec. 112, Sept. 29, 1979, 93 Stat. 580; Pub. L. 97-35, 
title XXVII, Sec. 2757(b), Aug. 13, 1981, 95 Stat. 931; Pub. L. 99-92, 
Sec. 8(b)-(d), Aug. 16, 1985, 99 Stat. 398; Pub. L. 100-607, title VII, 
Secs. 713(b)-(g), 714(a)-(c), Nov. 4, 1988, 102 Stat. 3160, 3161; Pub. 
L. 101-93, Sec. 5(r), Aug. 16, 1989, 103 Stat. 614; Pub. L. 102-408, 
title II, Sec. 211(a)(1), Oct. 13, 1992, 106 Stat. 2078; Pub. L. 105-
392, title I, Sec. 133(a)-(c)(1), Nov. 13, 1998, 112 Stat. 3575.)

                       References in Text

    This subpart, referred to in subsecs. (a), (b)(7), (d) to (h), (j), 
and (l), probably should be ``this part'', to reflect the redesignation 
of subpart II of part B of this subchapter as part E of this subchapter 
by Pub. L. 105-392, title I, Sec. 123(2), Nov. 13, 1998, 112 Stat. 3562.
    The Peace Corps Act, referred to in subsec. (b)(2), is Pub. L. 87-
293, Sept. 22, 1961, 75 Stat. 612, as amended, which is classified 
principally to chapter 34 (Sec. 2501 et seq.) of Title 22, Foreign 
Relations and Intercourse. For complete classification of this Act to 
the Code, see Short Title note set out under section 2501 of Title 22 
and Tables.
    Subsection (h) of this section, referred to in subsec. (h), was 
struck out and subsec. (i) was redesignated (h) by Pub. L. 102-408. See 
1992 Amendment note below.
    Section 6(b) of the Nurse Training Act of 1971, referred to in 
subsec. (h), is section 6(b) of Pub. L. 92-158, Nov. 18, 1971, 85 Stat. 
477. Section 6(b)(1) amended subsec. (b)(3) of this section, added 
former subsec. (h) of this section, and enacted the provisions 
editorially classified to subsec. (i) [now (h)] of this section. Section 
6(b)(2) enacted section 297i of this title which was transferred and 
redesignated as subsec. (j) [now (i)] of this section pursuant to 
section 941(h)(5) of Pub. L. 94-63.

                          Codification

    Provisions of subsec. (h) of this section were, in the original, 
enacted by section 6(b)(1) of Pub. L. 92-158, without directory language 
with respect to classification in the Code and were editorially set out 
as subsec. (i) [now (h)] as the probable intent of Congress.


                               Amendments

    1998--Subsec. (b)(1). Pub. L. 105-392, Sec. 133(a)(1), substituted 
semicolon for period at end.
    Subsec. (b)(2)(C). Pub. L. 105-392, Sec. 133(a)(2), added subpar. 
(C).
    Subsec. (b)(8). Pub. L. 105-392, Sec. 133(a)(3), (4), added par. 
(8).
    Subsec. (g). Pub. L. 105-392, Sec. 133(b), substituted ``$40'' for 
``$15''.
    Subsec. (l). Pub. L. 105-392, Sec. 133(c)(1), added subsec. (l).
    1992--Subsecs. (h) to (k). Pub. L. 102-408 redesignated subsecs. (i) 
to (k) as (h) to (j), respectively, and struck out former subsec. (h) 
which provided for a loan repayment program. See section 297n of this 
title.
    1989--Subsec. (h)(6)(C). Pub. L. 101-93 substituted ``means a 
skilled nursing facility, as such term is defined in section 1395x(j) of 
this title, and an intermediate care facility, as such term is defined 
in section 1396d(c) of this title'' for ``means an intermediate care 
facility and a skilled nursing facility, as such terms are defined in 
subsections (c) and (i), respectively, of section 1396d of this title''.
    1988--Subsec. (a). Pub. L. 100-607, Sec. 713(b), (c), inserted in 
first sentence ``, except that for the final two academic years of the 
program involved, such total may not exceed $4,000'', substituted 
``$13,000'' for ``$10,000'' in second sentence, and inserted ``, to 
persons with exceptional financial need,'' after ``nurses'' in third 
sentence.
    Subsec. (b)(1)(C). Pub. L. 100-607, Sec. 713(d), amended subpar. (C) 
generally. Prior to amendment, subpar. (C) read as follows: ``if a 
student who will enroll in the school after June 30, 1986, is of 
exceptional financial need (as defined by regulations of the 
Secretary)''.
    Subsec. (b)(2)(B). Pub. L. 100-607, Sec. 713(e), substituted ``ten'' 
for ``five'' and inserted ``or half-time'' after ``a full-time''.
    Subsec. (b)(5). Pub. L. 100-607, Sec. 713(f), substituted ``5 
percent'' for ``6 per centum''.
    Subsec. (h)(1)(C). Pub. L. 100-607, Sec. 714(a), amended subpar. (C) 
generally. Prior to amendment, subpar. (C) read as follows: ``who enters 
into an agreement with the Secretary to serve as a nurse for a period of 
at least two years in an area in a State determined by the Secretary, 
after consultation with the appropriate State health authority (as 
determined by the Secretary by regulations), to have a shortage of and 
need for nurses;''.
    Subsecs. (h)(5), (6). Pub. L. 100-607, Sec. 714(b), (c), added pars. 
(5) and (6).
    Subsec. (j)(2) to (4). Pub. L. 100-607, Sec. 713(g), redesignated 
par. (4) as (3) and struck out former par. (3) which related to low-
income or disadvantaged family.
    1985--Subsec. (b)(1). Pub. L. 99-92, Sec. 8(b), which directed that 
cl. (C) be inserted before period, was executed by inserting cl. (C) 
before the semicolon as the probable intent of Congress.
    Subsec. (f). Pub. L. 99-92, Sec. 8(c), substituted ``the Secretary 
and in accordance with this section, a school shall'' for ``the 
Secretary, a school may'', and substituted provisions relating to 
charges not allowed in certain cases and allowed where payment is late 
for provisions relating to maximum amount of late charges.
    Subsec. (k). Pub. L. 99-92, Sec. 8(d), added subsec. (k).
    1981--Subsec. (b)(5). Pub. L. 97-35 substituted ``6'' for ``3''.
    1979--Subsec. (b)(3). Pub. L. 96-76 inserted provisions requiring 
conditions to be applicable to loans arising prior to Sept. 29, 1979.
    1975--Subsec. (a). Pub. L. 94-63, Sec. 941(h)(1), substituted 
``subpart'' for ``part''.
    Subsec. (b). Pub. L. 94-63, Sec. 941(h)(2), struck out ``of Health, 
Education, and Welfare'' after ``Secretary''.
    Subsec. (b)(2)(B). Pub. L. 94-63, Sec. 936(b), inserted ``(or 
training to be a nurse anesthetist)'' after ``professional training in 
nursing''.
    Subsec. (b)(7). Pub. L. 94-63, Sec. 941(h)(1), substituted 
``subpart'' for ``part''.
    Subsec. (c). Pub. L. 94-63, Sec. 941(h)(2), struck out ``of Health, 
Education, and Welfare'' after ``Secretary''.
    Subsecs. (d) to (i). Pub. L. 94-63, Sec. 941(h)(1), substituted 
``subpart'' for ``part'' whenever appearing.
    Subsec. (j). Pub. L. 94-63, Sec. 941(h)(5), added subsec. (j), 
formerly classified as section 297i of this title pursuant to enactment 
as section 830 of act July 1, 1944, ch. 373. Section 941(h)(5)(A) of 
Pub. L. 94-63 transferred such former section to this section and 
section 941(h)(5)(B) redesignated provision as subsec. (j).
    1971--Subsec. (a). Pub. L. 92-158, Sec. 6(a), substituted``$2,500'' 
for ``$1,500'' and ``$10,000'' for ``$60,000''.
    Subsec. (b)(1). Pub. L. 92-158, Sec. 6(e), substituted ``full-time 
or half-time course of study'' for ``full-time course of study''.
    Subsec. (b)(2). Pub. L. 92-158, Sec. 6(e), in text preceding cl. 
(A), substituted ``full-time or half-time course of study'' for ``full-
time course of study''.
    Subsec. (b)(3). Pub. L. 92-158, Sec. 6(b)(1)(A), substituted 
provisions cancelling up to 85 per centum of loan, for provisions 
cancelling up to 50 per centum of loan, where borrower holds full-time 
employment as a professional nurse, added to areas of possible 
employment under this par. by inserting reference to any public or 
nonprofit organization including neighborhood health centers, 
substituted, with regard to the rate of cancellation of loan, the rate 
of 15 per centum of the amount unpaid on the first day of service, 
continuing at such rate with each of the first, second and third 
complete years of such service and 20 per centum of such amount with 
each complete fourth and fifth year of service for the rate of 10 per 
centum of the amount unpaid on the first day of service and to continue 
with each complete year of service, and struck out reference to 15 per 
centum rate of cancellation per complete year of service plus, for the 
purpose of such higher rate, the cancellation of an additional 50 per 
centum of such loan where such service is in a public or nonprofit 
hospital in any area which is determined, in accordance with the 
regulations of the Secretary, to be in an area having a substantial 
shortage of such nurses at such hospitals.
    Subsec. (h). Pub. L. 92-158, Sec. 6(b)(1)(B), added subsec. (h).
    1968--Subsec. (a). Pub. L. 90-490, Sec. 222(b)(1), increased 
limitation on amount of annual loans per student from $1,000 to $1,500, 
required preferences in granting of loans to licensed practical nurses, 
and limited aggregate of loans for all years to any one student to 
$6,000.
    Subsec. (b)(2). Pub. L. 90-490, Sec. 222(b)(2), provided for 
commencement of repayment nine months, rather than one year, after 
student ceases to pursue full-time course of study, excluded from ten-
year repayment period periods (up to three years) of active duty as 
member of a uniformed service or Peace Corps volunteer service and 
periods (up to five years) as undergraduate or graduate degree student 
in nursing, including advanced professional training in nursing, and 
struck out prohibition against accrual of interest on loans.
    Subsec. (b)(3). Pub. L. 90-490, Sec. 222(b)(3), authorized 
cancellation of an additional 50 per centum of a nursing student loan 
(plus interest) at rate of 15 per centum for each complete year of 
service in a public or other nonprofit hospital in an area with a 
substantial shortage of nurses.
    Subsec. (b)(5). Pub. L. 90-490, Sec. 222(b)(4), struck out 
provisions for an interest rate which is the greater of 3 per centum or 
the going Federal rate at time loan is made, defining going Federal 
rate, and making rate determined for first loan applicable to any 
subsequent loan.
    Subsecs. (f), (g). Pub. L. 90-490, Sec. 222(c)(1), added subsecs. 
(f) and (g).
    1965--Subsec. (b)(5). Pub. L. 89-290 applied rate of interest for 
first loan obtained by a student from a loan fund established under this 
part to any subsequent loan to such student from such fund during his 
course of study.


                    Effective Date of 1998 Amendment

    Pub. L. 105-392, title I, Sec. 133(c)(2), Nov. 13, 1998, 112 Stat. 
3576, provided that: ``The amendment made by paragraph (1) [amending 
this section] shall be effective with respect to actions pending on or 
after the date of enactment of this Act [Nov. 13, 1998].''


                    Effective Date of 1985 Amendment

    Amendment by Pub. L. 99-92 effective Oct. 1, 1985, see section 10(a) 
of Pub. L. 99-92, set out as a note under section 297a of this title.


                    Effective Date of 1975 Amendment

    Section 936(b) of Pub. L. 94-63 provided that the amendment made by 
that section is effective with respect to periods of training to be a 
nurse anesthetist undertaken on or after July 29, 1975.
    Amendment by section 941(h)(1), (2), (5), (i)(1) of Pub. L. 94-63 
effective July 1, 1975, see section 942 of Pub. L. 94-63, set out as a 
note under section 297a of this title.


                    Effective Date of 1971 Amendment

    Section 6(a)(1) of Pub. L. 92-158 provided that the amendment made 
by that section is effective with respect to academic years (or their 
equivalent as determined under regulations of the Secretary of Health, 
Education, and Welfare under this section) beginning after June 30, 
1971.


                    Effective Date of 1968 Amendment

    Section 222(i) of Pub. L. 90-490 provided that: ``The amendments 
made by subsection (b)(1) and (2) [amending this section] shall apply 
with respect to all loans made after June 30, 1969, and with respect to 
loans made from a student loan fund established under an agreement 
pursuant to section 822 [section 297a of this title], before July 1, 
1969, to the extent agreed to by the school which made the loans and the 
Secretary (but then only for years beginning after June 30, 1968). The 
amendments made by subsection (b)(4) [amending this section] and 
subsection (c) [amending this section and section 297a of this title] 
shall apply with respect to loans made after June 30, 1969. The 
amendment made by subsection (h) [enacting section 297h of this title] 
shall apply with respect to appropriations for fiscal years beginning 
after June 30, 1969. The amendment made by subsection (b)(3) [amending 
this section] shall apply with respect to service, specified in section 
823(b)(3) of such Act [subsec. (b)(3) of this section] performed during 
academic years beginning after the enactment of this Act, whether the 
loan was made before or after such enactment [Aug. 16, 1968].''


                     Construction of 1992 Amendment

    Section 211(b) of Pub. L. 102-408 provided that: ``With respect to 
section 836(h) of the Public Health Service Act [former subsec. (h) of 
this section], as in effect prior to the date of the enactment of this 
Act [Oct. 13, 1992], any agreement entered into under such section that 
is in effect on the day before such date remains in effect in accordance 
with the terms of the agreement, notwithstanding the amendment made by 
subsection (a) of this section [enacting section 297n of this title, 
amending this section, and repealing section 297c-1 of this title].''

                  Section Referred to in Other Sections

    This section is referred to in section 297a of this title.
