Title 42 › CHAPTER 129 — NATIONAL AND COMMUNITY SERVICE › SUBCHAPTER I — NATIONAL AND COMMUNITY SERVICE STATE GRANT PROGRAM › § 12604
The Trust pays educational awards to do five main things: help pay back student loans, cover part or all of college costs or other approved training, pay for school-to-work program expenses, pay for VA-approved training or on-the-job programs, and pay certain interest costs under rules the Corporation makes. If you want the award to repay loans, you must apply to the Corporation on its form. The form must show who holds the loans, how much principal and interest are owed, which loans you want paid first if the award is smaller than your balance, and any other info the Corporation asks for. The Corporation will send the award money straight to the loan holder and the payment needs your endorsement. Loan holders must tell the Corporation how they applied the payment, and the Corporation must tell you how much was paid for each loan and when. “Qualified student loans” include most federal student loans (except parent PLUS loans), certain public health loans, and other school-approved loans made or guaranteed by eligible lenders, the Direct Loan program, state agencies, or lenders the Corporation approves. A “holder” is the original lender or whoever later legally owns the loan. To use an award for current school costs, you apply on the Corporation’s form to the school. The school must send the Corporation a certification that students are eligible, that the school meets participation rules, and that award users are no more than 15 percent of the school’s students. The Corporation pays the school, with the student’s endorsement, and must pay each enrollment period in two or more installments, with no installment over half of the total and the gap between payments at least half the enrollment period unless matching semesters. Schools must return funds if a student withdraws, under fair refund rules, and returned funds can be used to support more program spots. The Corporation will set rules to pay interest that builds up during loan forbearance if the member finishes service. Some people can transfer their award to a child, foster child, or grandchild—this is allowed for certain older members (age 55 or older before service) and for silver scholar awards. Transfers can be changed while any award money is unused, cannot be treated as marital property, survive the transferor’s death if done beforehand, and must follow anti-fraud procedures the Corporation sets. With the CEO’s OK, a program may let participants give up their award for a nonfederal post-service benefit paid entirely with nonfederal funds. For these rules, “institution of higher education” means the definition in the Higher Education Act.
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The Public Health and Welfare, Source: USLM XML via OLRC
Legislative History
Reference
Citation
42 U.S.C. § 12604
Title 42, The Public Health and Welfare
Last Updated
Sep 23, 2026
Release point: 119-110