§292n Additional Requirements for Institutions and Lenders

Summary

The Secretary can make rules that cover how schools, lenders, and borrowers must handle loans under this program. Those rules can require audits of schools about money from borrowers; set basic financial and administrative standards for schools that run student aid; allow the Secretary to limit, suspend, or stop a school’s eligibility after notice and a hearing if it breaks the rules; require gathering information from borrowers, lenders, or schools to check compliance with section 292d; make sure borrowers are charged tuition and fees that are the same as or less than nonborrowers; require reporting of each loan to the Office of Health Education Assistance Loan Default Reduction (including origination date, sale date, who holds the loan, and changes in borrower status); allow a school to withhold services like academic and financial aid transcripts and alumni services if a borrower defaults, except for borrowers in bankruptcy; and require lenders to offer different repayment plans, such as fixed-rate, graduated plans (which may allow negative amortization), and temporary income-dependent payments followed by level monthly payments. The Secretary must also require each participating school to keep and give lenders and the Secretary, on request, a borrower’s name, address, postgraduate destination, and other basic ID information. Each participating school must hold a required workshop at the start of each school year that all student borrowers must attend about the loan program.