§940c Cushion of credit payments program

Summary

The Secretary must create and promote a program that asks borrowers to voluntarily deposit money into "cushion of credit" accounts inside the Rural Electrification and Telephone Revolving Fund. However, no new deposits may be made starting December 20, 2018. Money in each account earns 5 percent per year, except it earns 4 percent in fiscal year 2021 and then the current 1-year Treasury rate after that. Borrowers can cut the account balance only to make scheduled loan payments. From December 20, 2018 through September 30, 2020, borrowers may instead use the money to prepay loans, and no prepayment fee can be charged on that prepaid part. The Treasury must provide any sums needed to cover loan modification costs defined in section 661a of title 2. Cushion payments are kept as cash balances in the Fund in each borrower’s account. All those cash balances earn interest for the Fund at the weighted average rate paid on the Fund’s outstanding certificates of beneficial ownership, and that interest lowers the Fund’s interest payments on those certificates. The Secretary must also keep a subaccount and each month credit an amount equal to the outstanding cushion payments made after October 1, 1987, multiplied by the monthly difference between the average weighted certificate rate and 5 percent.