amendments relating to administrative cost allowance and interest rate provisions

amendments relating to administrative cost allowance and interest rate provisions Sec. 115. (a) (1) Section 428(a)(2)(B) of the Higher Education Act of 1965 is amended to read as follows: “(B) If (i) a State student loan insurance program is covered by an agreement under subsection (b), (ii) a statute of such State limits the interest rate on loans insured by such program to a rate which is less than 7 per centum per annum on the unpaid principal balance, and (iii) the Commissioner determines that section 428(d) does not make such statutory limitation inapplicable and that such statutory limitation threatens to impede the carrying out of the purposes of this part, then he may pay an administrative cost allowance to the holder of each loan which is insured under such program and which is made during the period beginning on the sixtieth day after the date of enactment of the Higher Education Amendments of 1968 and ending 120 days after the adjournment of such State’s first regular legislative session which adjourns after January 1, 1969, Such administrative cost allowance shall be paid over the term of the loan in an amount per annum (determined by the Commissioner) which shall not exceed 1 per centum of the unpaid principal balance of the loan.” (2) Section 428(a) (2) (A) of such Act is amended by striking out the second sentence and by inserting in the last, sentence after “portion of the interest” the following: “and administrative cost allowance”. (3) Section 428 of such Act is amended by adding at the end thereof the following new subsection: “(d) No provision of any law of the United States (other than sections 427 (a)(2)(D) and 427(b) of this Act) or of any State (other 82 Stat. 1023than a statute applicable principally to such State’s student loan insurance program) which limits the rate or amount of interest payable on loans shall apply to a loan— “(1) which bears interest (exclusive of any premium for insurance) on the unpaid principal balance at a rate not in excess of 7 per centum per annum, and “(2) which is insured (A) by the United States under this part, or (B) by a State or nonprofit private institution or organization under a program covered by an agreement made pursuant to subsection (o) of this section.” (4) The amendments made by this subsection shall not apply with respect to loans made prior to the sixtieth day after the date of enactment of this Act. (b) Section 428(a) (2) (B) of such Act (as in effect prior to the amendment made by subsection (a)) is amended by striking out “October 31, 1968” and inserting in lieu thereof “the fifty-ninth day after the date of enactment of the Higher Education Amendments of 1968”. (c) The amendments made by section 2(a) of Public Law 90–460, approved August 3, 1968, shall not be effective with respect to (1) any Loan made or contracted for prior to the date of enactment of such Public Law, or (2) any loan made, after the date of enactment, of this Act, in whole or in part to consolidate or convert a loan made or contracted for prior to the date of enactment of such Public Law.