Page:United States Statutes at Large Volume 100 Part 2.djvu/257

 PUBLIC LAW 99-498—OCT. 17, 1986

100 STAT. 1359

distribution of the benefits of this part, assign, within the maximum amounts specified in subsection (a), Federal loan insurance quotas applicable to eligible lenders, or to States or areas, and may from time to time reassign unused portions of these quotas. "LIMITATIONS ON INDIVIDUAL FEDERALLY INSURED LOANS AND ON FEDERAL LOAN INSURANCE "SEC. 425. (a) ANNUAL AND AGGREGATE LIMITS.— "(1) ANNUAL LIMITS.—(A) The total of loans made

to a student in any academic year or its equivalent (as determined by the Secretary) which may be covered by Federal loan insurance under this part may not exceed— "(i) $2,625, in the case of a student who has not successfully completed the first and second year of a program of undergraduate education; "(ii) $4,000, in the case of a student who has successfully completed such first and second year but who has not successfully completed the remainder of a program of B undergraduate education; or "(iii) $7,500, in the case of a graduate or professional student (as defined in regulations of the Secretary). "(B) The annual insurable limits contained in subparagraph (A) shall not apply in cases where the Secretary determines, pursuant to regulations, that a higher amount is warranted in order to carry out the purpose of this part with respect to students engaged in specialized training requiring exceptionally high costs of education. The annual insurable limit per student shall not be deemed to be exceeded by a line of credit under which actual payments by the lender to the borrower will not be made in any year in excess of the annual limit. "(2) AGGREGATE LIMITS.—(A) The aggregate insured unpaid principal amount for all such insured loans made to any student shall not at any time exceed— "(i) $17,250, in the case of any student who has not successfully completed a program of undergraduate edu'^ cation; and "(ii) $54,750, in the case of any graduate or professional student (as defined by regulations of the Secretary and including any loans which are insured by the Secretary under this part, or by a guaranty agency, made to such person before he or she became a graduate or professional student). "(B) The Secretary may increase the aggregate insurable limit applicable to students who are pursuing programs which the Secretary determines are exceptionally expensive. "(b) LEVEL OF INSURANCE COVERAGE BASED ON DEFAULT RATE.— "(1) REDUCTION FOR DEFAULTS IN EXCESS OF 5 OR 9 PERCENT.—

(A) Except as provided in subparagraph (B), the insurance liability on any loan insured by the Secretary under this part shall be 100 percent of the unpaid balance of the principal amount of the loan plus interest, except that— "(i) if, for any fiscal year, the total amount of payments under section 430 by the Secretary to any eligible lender as described in section 435(d)(l)(D) exceeds 5 percent of the sum of the loans made by such lender which are insured by the Secretary and which were in repayment at the end of

20 USC 1075.

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