Page:United States Statutes at Large Volume 120.djvu/201

 120 STAT. 170 20 USC 1078 note.

VerDate 14-DEC-2004

10:20 Jul 12, 2007

PUBLIC LAW 109–171—FEB. 8, 2006

(2) EFFECTIVE DATE OF AMENDMENTS.—The amendments made by this subsection shall apply with respect to loans for which the first disbursement of principal is made on or after July 1, 2006. (d) CONSOLIDATION OF DEFAULTED LOANS.—Section 428(c) (20 U.S.C. 1078(c)) is further amended— (1) in paragraph (2)(A)— (A) by inserting ‘‘(i)’’ after ‘‘including’’; and (B) by inserting before the semicolon at the end the following: ‘‘and (ii) requirements establishing procedures to preclude consolidation lending from being an excessive proportion of guaranty agency recoveries on defaulted loans under this part’’; (2) in paragraph (2)(D), by striking ‘‘paragraph (6)’’ and inserting ‘‘paragraph (6)(A)’’; and (3) in paragraph (6)— (A) by redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively; (B) by inserting ‘‘(A)’’ before ‘‘For the purpose of paragraph (2)(D),’’; and (C) by adding at the end the following new subparagraphs: ‘‘(B) A guaranty agency shall— ‘‘(i) on or after October 1, 2006— ‘‘(I) not charge the borrower collection costs in an amount in excess of 18.5 percent of the outstanding principal and interest of a defaulted loan that is paid off through consolidation by the borrower under this title; and ‘‘(II) remit to the Secretary a portion of the collection charge under subclause (I) equal to 8.5 percent of the outstanding principal and interest of such defaulted loan; and ‘‘(ii) on and after October 1, 2009, remit to the Secretary the entire amount charged under clause (i)(I) with respect to each defaulted loan that is paid off with excess consolidation proceeds. ‘‘(C) For purposes of subparagraph (B), the term ‘excess consolidation proceeds’ means, with respect to any guaranty agency for any Federal fiscal year beginning on or after October 1, 2009, the proceeds of consolidation of defaulted loans under this title that exceed 45 percent of the agency’s total collections on defaulted loans in such Federal fiscal year.’’. (e) DOCUMENTATION OF FORBEARANCE AGREEMENTS.—Section 428(c) (20 U.S.C. 1078(c)) is further amended— (1) in paragraph (3)(A)(i)— (A) by striking ‘‘in writing’’; and (B) by inserting ‘‘and documented in accordance with paragraph (10)’’ after ‘‘approval of the insurer’’; and (2) by adding at the end the following new paragraph: ‘‘(10) DOCUMENTATION OF FORBEARANCE AGREEMENTS.—For the purposes of paragraph (3), the terms of forbearance agreed to by the parties shall be documented by confirming the agreement of the borrower by notice to the borrower from the lender, and by recording the terms in the borrower’s file.’’. (f) VOLUNTARY FLEXIBLE AGREEMENTS.—Section 428A(a) (20 U.S.C. 1078–1(a)) is further amended—

Jkt 059194

PO 00001

Frm 00168

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL001.109

APPS06

PsN: PUBL001

�