§292a Scope and duration of loan insurance program

Summary

It limits how much new loan principal and line-of-credit payments can get federal insurance: $350,000,000 for fiscal year 1993, $375,000,000 for fiscal year 1994, and $425,000,000 for fiscal year 1995. If less is used in any year, the unused amount rolls over and is added to the next year’s limit; if no limit exists for a year, the rolled-over amount becomes that year’s limit. After those years, insurance can only be given to help students who already had insured loans under this program finish their education or to let them borrow to pay interest on prior insured loans, and no insurance may be given for any loan or installment paid after September 30, 1998. The Secretary must award the total insured amounts without following apportionment rules under chapter 15 of title 31. The Secretary can assign loan-insurance quotas to lenders, States, or areas and reassign unused parts to keep benefits spread fairly. When issuing insurance certificates through comprehensive contracts, priority goes to lenders who offer lower interest rates or otherwise better terms for students than usual. The Student Loan Marketing Association may buy, sell, service, consolidate, or deal in loans insured here. If loans are consolidated under that authority, the consolidated rate is the weighted average of the loans offered, rounded downward to the nearest one-eighth of 1 percent, but not below the applicable guaranteed student loan rate under part B of title IV of the Higher Education Act; borrowers must pay interest that accrues before repayment or during periods when principal need not be paid. Federal lender rules still apply to the Association and other entities that buy student loans, including rules on applications, contracts, and due diligence.