Page:United States Statutes at Large Volume 102 Part 4.djvu/153

 PUBLIC LAW 100-607—NOV. 4, 1988

,

102 STAT. 3123

eligible lenders are generally making such loans during such period.". (e)

FREQUENCY

OF

CJOMPOUNDING

OF

INTEREST.—Section

731(a)(2)(D)) (42 U.S.C. 294d(a)(2)(D)) is amended by inserting "not more frequently than" after "compounded". (f) DETERMINATION OF FINANCIAL NEED OF STUDENTS.—Section 731

(42 U.S.C. 294d) is amended by adding at the end the following new subsection: "(e) With respect to any determination of the financial need of a student for a loan covered by Federal loan insurance under this subpart, this subpart may not be construed to limit the authority of any school to make such allowances for students with special circumstances as the school determines appropriate.". (g) AUTHORITY FOR ASSIGNMENT OF IX)ANS WITH RESPECT TO SECONDARY MARKET.—Section 732(d) (42 U.S.C. 294e(d)) is amended

by striking "eligible lender, or" and inserting the following: "eligible lender (including a public entity in the business of purchasing student loans), o r '. (h) CLARIFICATION WITH RESPECT TO REFERENCE TO HOLDERS OF FEDERALLY INSURED LOANS.—Section 733(d) (42 U.S.C. 294f(d)) is

amended in the first sentence by inserting "eligible lender or" before "holder"; (i) AMOUNT OF Loss PURSUANT TO DEFAULT.—Section 733(e)(2) (42 U.S.C. 294f(e)(2)) is amended by inserting before the semicolon the following: ", less the amount of any judgment collected pursuant to default proceedings commenced by the eligible lender or holder involved. (j) CLARIFICATION WITH RESPECT TO EFFECT OF BANKRUPTCY.—

Section 733(g) (42 U.S.C. 294f(g)) is amended by inserting "any chapter o f before "title 11,". (k) PROVISIONS WITH RESPECT TO ACTIONS FOR DEFAULT.—

(1) Section 733(a) (42 U.S.C. 294f(a)) is amended by striking "(including, if appropriate, commencement of a suit)" and inserting the following: "(including, subject to subsection (h), commencement and prosecution of an action)". (2) Section 733 (42 U.S.C. 294f) is amended— (A) in subsection (b), by adding at the end thereof the following new sentence: "The Secretary may sell without recourse to eligible lenders (or other entities that the Secretary determines are capable of dealing in such loans) notes or other evidence of loans received through assignment under the first sentence."; and (B) by adding at the end the following new subsections: "(h)(1) With respect to the default by a borrower on any loan covered by Federal loan insurance under this subpart, the Secretary shall, under subsection (a), require an eligible lender or holder to commence and prosecute an action for such default unless— "(A) in the determination of the Secretary— "(i) the eligible lender or holder has made reasonable efforts to serve process on the borrower involved and has been unsuccessful with respect to such efforts, or "(ii) prosecution of such an action would be fruitless because of the financial or other circumstances of the borrower; "(B) for such loans made before the date of the enactment of the Health Professions Reauthorization Act of 1988, the loan involved was made in an amount of less than $5,000; or

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