Page:United States Statutes at Large Volume 121.djvu/814

 PUBLIC LAW 110–84—SEPT. 27, 2007

121 STAT. 793

dkrause on GSDDPC44 with PUBLAW

partial financial hardship, to have the borrower’s aggregate monthly payment for all such loans not exceed the result described in subsection (a)(3)(B) divided by 12; ‘‘(2) the holder of such a loan shall apply the borrower’s monthly payment under this subsection first toward interest due on the loan, next toward any fees due on the loan, and then toward the principal of the loan; ‘‘(3) any interest due and not paid under paragraph (2)— ‘‘(A) shall, on subsidized loans, be paid by the Secretary for a period of not more than 3 years after the date of the borrower’s election under paragraph (1), except that such period shall not include any period during which the borrower is in deferment due to an economic hardship described in section 435(o); and ‘‘(B) be capitalized— ‘‘(i) in the case of a subsidized loan, subject to subparagraph (A), at the time the borrower— ‘‘(I) ends the election to make income-based repayment under this subsection; or ‘‘(II) begins making payments of not less than the amount specified in paragraph (6)(A); or ‘‘(ii) in the case of an unsubsidized loan, at the time the borrower— ‘‘(I) ends the election to make income-based repayment under this subsection; or ‘‘(II) begins making payments of not less than the amount specified in paragraph (6)(A); ‘‘(4) any principal due and not paid under paragraph (2) shall be deferred; ‘‘(5) the amount of time the borrower makes monthly payments under paragraph (1) may exceed 10 years; ‘‘(6) if the borrower no longer has a partial financial hardship or no longer wishes to continue the election under this subsection, then— ‘‘(A) the maximum monthly payment required to be paid for all loans made to the borrower under part B or D (other than an excepted PLUS loan or excepted consolidation loan) shall not exceed the monthly amount calculated under section 428(b)(9)(A)(i) or 455(d)(1)(A), based on a 10-year repayment period, when the borrower first made the election described in this subsection; and ‘‘(B) the amount of time the borrower is permitted to repay such loans may exceed 10 years; ‘‘(7) the Secretary shall repay or cancel any outstanding balance of principal and interest due on all loans made under part B or D (other than a loan under section 428B or a Federal Direct PLUS Loan) to a borrower who— ‘‘(A) at any time, elected to participate in income-based repayment under paragraph (1); and ‘‘(B) for a period of time prescribed by the Secretary, not to exceed 25 years, meets 1 or more of the following requirements— ‘‘(i) has made reduced monthly payments under paragraph (1) or paragraph (6); ‘‘(ii) has made monthly payments of not less than the monthly amount calculated under section 428(b)(9)(A)(i) or 455(d)(1)(A), based on a 10-year

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