Page:United States Statutes at Large Volume 82.djvu/678

 636

79 Stat. 1041. 20 USC 988.

79 Stat. 1037. 20 USC 981.

PUBLIC LAW 90-460-AUG. 3, 1968

[82 STAT.

" (B) When, due to State laws which do not permit an interest rate of 7 per centum per annum, and when the Commissioner determines that such statutory limitations threaten to impede the carrying out of the purposes of this Act, he may authorize an administrative cost allowance, not to exceed 1 per centum per annum of the unpaid principal balance, for the term of any loan insured by the Commissioner under this part or under a State or private nonprofit student loan insurance program covered by an agreement under subsection (b). Such an administrative cost allowance may be paid on loans made during the period beginning on the date of enactment of this subparagraph and ending on October 31, 1968." (2)(A) Section 9(a)(1) of such Act is amended by inserting after the first sentence the following new sentence: " I n addition, the Commissioner shall pay an administrative cost allowance in the amount established by paragraph (2)(B) of this subsection with respect to loans to any such student but without regard to the student's adjusted family income." (B) Section 9(a)(2)(A) of such Act (as so designated by this section) is amended by inserting after the first sentence the following: " For purposes of the preceding sentence, the term 'interest' includes any administrative cost allowance paid pursuant to subparagraph (B)." (C) The second sentence of section 9(a)(2)(A) of such Act is amended by inserting "and the administrative cost allowance payable under this subsection" after "determined". (D) Section 9(a)(3) of such Act is amended by inserting "or of administrative cost allowances" after "interest". (3) Section 2(b)(2) of such Act is amended by inserting "and administrative cost allowances" after "interest". FEDERAL GUARANTY OF STUDENT LOANS INSURED UNDER NON-FEDERAL PROGRAMS

79 Stat. 1236. 20 USC 1071.

Post, p. 1021. 20 USC 1078.

Provisions.

SEC. 3. (a) Section 421(a) of the Higher Education Act of 1965 is amended by striking out "and" before " (3)", and by inserting before the period at the end of that subsection the following: ", and (4) to guarantee a portion of each loan insured under a program of a State or of a nonprofit private institution or organization which meets the requirements of section 428(a)(1)(C) ". (b) Section 428 of such Act is amended by adding after subsection (b) the following new subsection: "(c)(1) The Commissioner may enter into a guaranty agreement with any State or any nonprofit private institution or organization with which he has an agreement pursuant to subsection (b), whereby the Commissioner shall undertake to reimburse it, under such terms and conditions as he may establish, in an amount equal to 80 per centum of the amount expended by it in discharge of its insurance obligation, incurred under its loan insurance program, with respect to losses (resulting from the default, death, or permanent and total disability of the student borrower) on the unpaid balance of the principal (other than interest added to principal) of any insured loan with respect to which a portion of the interest (A) is payable by the Commissioner under subsection (a), or (B) would be payable under such subsection but for the adjusted family income of the borrower. "(2) The guaranty agreement— " (A) shall set forth such administrative and fiscal procedures as may be necessary to protect the United States from the risk of unreasonable loss thereunder, to insure proper and efficient admin-

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