§1087b Funds for Origination of Direct Student Loans

Summary

The Secretary must give money for student and parent loans based on each student’s and parent’s need and eligibility at each participating college or university. The money goes either directly to a school that has agreed with the Secretary to take part and to make loans, or through another approved lender the Secretary picks for students at schools that take part but do not make loans themselves. No school is guaranteed the right to take part, to make loans, or to run program tasks, but eligible students and parents at participating schools still have the right to borrow. Loan funds must be paid to a school before the payment period begins and in the same way Federal Pell Grants are paid. For schools outside the United States, the Secretary must use a U.S. bank or financial institution as an agent to receive and send the funds, and the foreign school must arrange with that agent to get the money.