§292a Scope and Duration of Loan Insurance Program

Summary

The federal government will insure new student loans up to $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, and if a year has no set limit the rolled-over amount becomes that year’s limit. After those amounts are used, insurance may only be given to help students who already had insured loans to continue or finish their education, or to let them borrow to pay interest on those earlier loans. No insurance can be given for any loan or loan installment paid after September 30, 1998. The Secretary must give out the insurance amounts without following chapter 15 of title 31 apportionment rules or similar limits. The Secretary can set and reassign insurance quotas to lenders, States, or areas to keep things fair. Lenders who offer lower interest rates or other better loan terms must get priority for insurance certificates. The Student Loan Marketing Association may buy, sell, service, and otherwise deal in loans that are insured under this part. If such loans are consolidated, the new interest rate must be the weighted average of the loans being combined, rounded down to the nearest one-eighth of 1 percent, but not below the guaranteed student loan program rate. The borrower must pay any interest that builds up before repayment starts or during periods when principal does not have to be paid under the Higher Education Act. Federal rules for lenders also apply to the Association and to other entities that buy student loans.