Page:United States Statutes at Large Volume 100 Part 2.djvu/342

 100 STAT. 1444

PUBLIC LAW 99-498—OCT. 17, 1986

the complement of such default rate. For any institution which has a default rate that does not exceed 7.5 percent, the institution's default penalty is equal to one. "(g) APPLICABLE MAXIMUM DEFAULT RATE.—(1) For award years 1988, 1989, and 1990, the applicable maximum default rate is 20 percent. "(2) For award year 1991 and subsequent years, the applicable maximum default rate is 15 percent. "(h) DEFINITION OF DEFAULT RATE.—(1) For the purpose of this section, the default rate is computed by dividing— "(A) the total principal amount of defaulted loans; by "(B) the total principal amount of loans made under this part, less the principal amount of all loans made to borrowers who are eligible for deferment under section 464(c)(2)(A)(i) or are in a grace period preceding repayment. "(2) For the purpose of paragraph (1)(A), the total principal amount of defaulted loans is equal to the total amount borrowed under loans that have reached repayment status and that are in default, minus— "(A) amounts that have been repaid or cancelled on such loans; "(B) loans discharged in bankruptcy; "(C) loans referred or assigned to the Secretary for collection under paragraph (5)(A), (SXBXi), or (6) of section 463(a); and "(D) loans that are in default but on which the borrowers have made satisfactory arrangements to resume payment. "(3) A loan shall be considered to be in default— "(A) 120 days (in the case of a loan repayable monthly), or "(B) 180 days (in the case of a loan repayable quarterly), after the borrower fails to make an installment payment when due or to comply with other terms of the promissory note. "(i) FiuNG DEADLINES.—The Secretary shall, from time to time, set dates before which institutions must file applications for allocations under this part. "(j) REALLOCATION OF EXCESS ALLOCATIONS.—If an institution returns to the Secretary any portion of the sums allocated to such institution under this section for any fiscal year the Secretary shall, in accordance with regulations, reallocate such excess to other institutions. "AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION

20 USC 1087CC.

463. (a) CONTENTS OF AGREEMENTS.—An agreement with any institution of higher education for the payment of Federal capital contributions under this part shall— "(1) provide for the establishment and maintenance of a student loan fund for the purpose of this part; "(2) provide for the deposit in such fund of— "(A) Federal capital contributions from funds appropriated under section 461; 7iOk "(B) a capital contribution by such institution in an amount equal to not less than one-ninth of the amount of the Federal capital contributions described in subparagraph (A); "(C) collections of principal and interest on student loans ,. • made from deposited funds; "SEC.

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