§292q Agreements for operation of school loan funds

Summary

Allows the Secretary to make agreements with public or nonprofit schools of medicine, osteopathic medicine, dentistry, pharmacy, podiatric medicine, optometry, or veterinary medicine to create and run a student loan fund. Each agreement must have the school set up the fund and put into it the Federal capital contribution, at least one-ninth of that Federal amount from the school, loan principal and interest payments, collections under section 292r(j), and any other earnings. The money can only be used for loans to the school’s students and for the cost of collecting those loans. Loans may be given only to full-time students working toward the listed professional degrees. The school must tell each loan applicant in writing about the rules in section 292r under which the Secretary might pay outstanding loans. The agreement must also include whatever other terms are needed to protect the United States’ financial interests. The Secretary’s rules for measuring a school’s failure to collect loans must follow this method and may not force schools to repay loans that became uncollectible before August 1985. The failure rate is the defaulted principal outstanding divided by the matured loans, shown as a percent. Definitions: default — a borrower misses an installment payment when due or breaks another term of the promissory note; defaulted principal outstanding — total principal in repayment (minus amounts repaid or canceled) that is in default for at least 120 days if payments are monthly or at least 180 days if payments are less frequent; grace period — one year after a borrower stops full-time study; matured loans — total principal of all loans minus principal for students still enrolled full-time or in their grace period.