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Library of Congress Summary
The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.
8/25/1976--Passed House amended.
(Measure passed House, amended, roll call #656 (391-3)) Guaranteed Student Loan Amendments - Requires the Commissioner of Education to develop and carry out a plan to encourage States to establish a State guarantee agency for guaranteed student loans, under the Higher Education Act of 1965.
Provides that, within 90 days after the enactment of this Act, the Commissioner is required to submit to the Congress a description of the plan he has developed and a timetable for its execution.
Requires that before June 30, 1977, the Commissioner must submit to Congress a report which describes the activities which have been carried out under the plan.
Directs the Commissioner to make advances to each State and private nonprofit agency with which he has a guarantee agreement to be used by them for making payments under their insurance programs.
Sets the advanced amount at $50,000 or ten percent of the principal of the guaranteed loans whose repayment period began during the preceding fiscal year.
Provides that if a State has no student loan insurance program and consultations with the Governor show there is no likelihood of the State's adoptingg such a program, the Commissioner may make advances to a private nonprofit institution or organization.
Extends the guaranteed student loan program through fiscal year 1980, and sets the aggregate limit on new loans at $2,000,000,000.
Sets the student loan limits at $2,500 for undergraduates and $5,000 for graduate or professional students.
Provides that the insurance liability on any loan insured by the Commissioner under this Act is 100 percent of the unpaid balance of the loan.
Reduces the insurance liability to 90 percent where payments made because of loan defaults exceed five percent of the sum of the loans made by a lender.
Reduces the insurance liability to 80 percent where the payments to a lender exceed nine percent of such loans.
Requires the student borrower to keep the holder of his loan informed of his current address.
Provides that the repayment period may be suspended during a single period of unemployment if both lender and borrower agree, but only for a period of one year or less.
Requires the borrower to contact the holder of his loan within four months after leaving school so as to negotiate the terms for repayment.
Increases from $15,000 to $25,000, the family income figure below which interest payemnts may be made for the borrower.
Extends until October 1, 1980, the period during which loans may be made to qualify for the interest subsidy.
Provides that the period applicable with respect to loans to enable a student to continue his education after receiving a prior loan is extended to October 1, 1984.
Increases from 80 to 100 percent, the amount which the Commissioner will reimburse States for their expenditures in paying off their insurance obligations under guarantee agreements.
Decreases such percentage to 90 percent when a State's default rate reaches seven percent for the year, and 80 percent when a States's default rate reaches nine percent per year.
Permits the use of private collection agencies in cases of default.
Requires the Commissioner to approve standards for the recovery of loans by such agencies, and requires standards to be fair and reasonable.
Provides that a State or a State agency may not be a lender unless it agrees not to make loans to more than one-half of the students at any educational institution who are not graduate or professional students.
Provides that the payment of the special allowance shall be automatic and at specified rates when interest rates on insured student loans are so low as to impede the carrying out of the insured student loan program, under the Emergency Insured Student Loan Act. Repeals such Act effective October 1, 1977.
Prohibits the discharge through bankruptcy of student loan debts for a period of five years after the beginning of the repayment period.
House Democratic Caucus Summary
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