CHANGES IN THE SUPPLEMENTAL LOANS FOR STUDENTS PROGRAM.

SEC. 2003. CHANGES IN THE SUPPLEMENTAL LOANS FOR STUDENTS PROGRAM. (a) Restrictions on SLS Program at Institutions With High Cohort Default Rates.— (1) Restriction.— Section 428A(a) of the Higher Education Act of 1965 (20 U.S.C. 1078–1(a)) is amended— (A) by striking “(a) Authority To Borrow.—Graduate and professional students”; and inserting the following: “(a) Authority To Borrow.— “(1) Student eligibility.— Graduate and professional students”; (B) by indenting the remaining text of subsection (a) two em spaces; and 103 STAT. 2113 (C) by adding at the end thereof the following: “(2) Institutional eligibility.—Funds may not be borrowed under this section by any undergraduate student who is enrolled at any institution during any fiscal year if the cohort default rate for such institution, for the most recent fiscal year for which such rates are available, equals or exceeds 30 percent. The Secretary shall notify institutions to which such restriction applies annually, and specify the fiscal year covered by the restriction. The Secretary shall afford any institution to which such restriction applies an opportunity to present evidence contesting the accuracy of the calculation of the cohort default rate for such institution.”. (2) Definition.—Section 435 of such Act (20 U.S.C. 1085) is amended by adding at the end thereof the following new subsection: “(m) Cohort Default Rate.—The term ‘cohort default rate’ means, for any fiscal year in which 30 or more current and former students at the institution enter repayment on loans under section 428 or 428A 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 fiscal year who default before the end of the following fiscal year. For any fiscal year in which less than 30 of the institution’s current and former students enter repayment, the term ‘cohort default rate’ means the average of the rate calculated under the preceding sentence for the 3 most recent fiscal years. In the case of a student who has attended and borrowed at more than one school, the student (and his or her subsequent repayment or default) is attributed to each school for attendance at which the student received a loan that entered repayment in the fiscal year. A loan on which a payment is made by the school, its owner, agent, contractor, employee, or any other entity or individual affiliated with such school, in order to avoid default by the borrower, is considered as in default for purposes of this subsection. Any loan which has been rehabilitated before the end of such following fiscal year is not considered as in default for purposes of this subsection. The Secretary shall prescribe regulations designed to prevent an institution from evading the application to that institution of a default rate determination under this subsection through the use of such measures as branching, consolidation, change of ownership or control, or any similar device.”. (3) Effective date.— (A) Except as provided in subparagraph (B), the amendments made by this subsection shall apply to loans made on or after January 1, 1990, and before October 1, 1991. Regulations prescribed by the Secretary under the last sentence of section 435(m) of the Higher Education Act of 1965 (as added by such amendments) shall apply with respect to measures described in such sentence that are used on or after October 1, 1989. (B) The amendments made by this subsection shall not be applied to prevent an individual who is enrolled on the date of enactment of this Act in a program of instruction for which the individual has obtained a loan under section 428A of the Higher Education Act of 1965 from receiving additional loans under such section to cover the cost of 103 STAT. 2114attendance at that eligible institution to complete that program of instruction. (C) If, on or after November 8, 1989, the duration of any program of instruction is extended, subparagraph (B) shall not permit a student enrolled in such program of instruction to receive additional loans under such section 428A during the extension. (b) Maximum Loan Amounts.— (1) Amendment.—Section 428A(b)(1) of the Higher Education Act of 1965 (20 U.S.C. 1078–1(b)(D) is amended to read as follows: “(1) Annual limit.— Subject to paragraphs (2) and (3), the maximum amount a student may borrow in any academic year or its equivalent (as defined by regulation by the Secretary), or in any period of 9 consecutive months, whichever is longer, is $4,000, except that in the case of a student who has not successfully completed the first year of a program of undergraduate education and who is not enrolled in a program that is at least one academic year in length, as determined in accordance with regulations prescribed by the Secretary, such maximum amount shall be— “(A) $2,500 for a student who is determined, in accordance with such regulations, to be enrolled in a program whose length is at least ⅔ of an academic year; “(B) $1,500 for a student who is determined, in accordance with such regulations, to be enrolled in a program whose length is less than ⅔, but at least ⅓, of an academic year; and “(C) zero for a student who is determined, in accordance with such regulations, to be enrolled in a program whose length is less than ⅓ of an academic year.”. (2) Effective date.—The amendment made by this subsection shall apply to loans made on or after January 1, 1990, and before October 1, 1991. (c) Completion of High School Equivalency Required.— (1) Ability-to-benefit students ineligible for sls program until ged completion.—Section 428A(a)(1) of the Higher Education Act of 1965 (20 U.S.C. 1078–1(a)(1)) is further amended by adding at the end thereof the following new sentence: “No student who is admitted on the basis of the ability to benefit from the education or training provided by the institution (as determined under section 484(d)) shall be eligible to borrow funds under this section until such student has obtained a certificate of high school equivalency or a high school diploma.”. (2) GED program required for ability-to-benefit students.—Section 487(a) of the Higher Education Act of 1965 is amended by adding at the end thereof the following new paragraph: “(11) In the case of any institution which admits students on the basis of their ability to benefit from the education or training provided by such institution (as determined under section 484(d)), the institution will make available to such students a program proven successful in assisting students in obtaining a certificate of high school equivalency.”. (3) Effective date.—The amendments made by this subsection shall apply with respect to periods of enrollment beginning on or after January 1, 1990.