Page:United States Statutes at Large Volume 106 Part 1.djvu/609

 PUBLIC LAW 102-325—JULY 23, 1992 106 STAT. 577 under subsection (g), the institution's default penalty is a percentage equal to the comiHemeht 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. "(2) For fiscal year 1994 and any succeeding fiscal year, any institution with a cohort default rate (as defined under subsection (h)) which— "(A) equals or exceeds 15 percent, shall establish a default reduction plan pursuant to regulations issued by the Secretary; "(B) equals or exceeds 20 percent, but is less than 25 percent, shall have a default penalty of 0.9; "(C) equals or exceeds 25 percent, but is less than 30 percent, shall have a default penalty of 0.7; and "(D) equals or exceeds 30 percent shall have a default penalty of zero.". (d) APPLICABLE MAXIMUM DEFAULT RATE. —Section 462(g) of the Act is amended to read as follows: 20 USC lOSTbb. "(g) APPLICABLE MAXIMUM DEFAULT RATE.— (1) For award years 1992 and 1993, the applicable maximum default rate is 15 percent. "(2) For award year 1994 and subsequent years, the maximum cohort default rate is 30 percent.". (e) DEFINITIONS OF DEFAULT RATE AND COHORT DEFAULT RATE.— Section 462(h) of the Act is amended— (1) by striking the title of the subsection and inserting "DEFINITIONS OF DEFAULT RATE AND COHORT DEFAULT RATE."; (2) in paragraph (1), 1^ striking "For the purpose of this section," and insertiiag "For any award year prior to award year 1994, for the purpose of this section,"; (3) by redesignating paragraph (3) as paragraph (4); (4) by striking "120 in subparagraph (A) of such paragraph and inserting "240"; (5) by amending subparagraph (B) of such paragraph to read as follows: "(B) 270 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,"; and (6) by inserting after paragraph (2) the following new paragraph: "(3)(A) For award year 1994 and any succeeding year, the term 'cohort default rate' means, for any award year in which 30 or more current and former students at the institution enter repayment on loans under this part (received for attendance at the institution), the percentage of those current and former students who enter repayment on such loans (received for attendance at that institution) in that award year who default before the end of the following award year, "(B) In determining the number of students who default before the end of such award year, the Secretary shall, in calculating the cohort default rate, exclude any loans which, due to improper servicing or collection, would result in an inaccurate or incomplete calculation of the cohort default rate. "(C) For any award year in which less than 30 of the institution's current and former students enter repayment, the term 'cohort default rate' means the percentage of such current and former students who entered repayment on such loans in any of the three most recent award years and who default before 59-194 O—93 20: QL 3(Pt. 1)

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