SUPPLEMENTAL LOAN PROGRAM.

SEC. 417. SUPPLEMENTAL LOAN PROGRAM. (a) Name of the Program.— Section 428A of the Act (20 U.S.C. 1078–1) is amended by striking the heading of such section and inserting the following: 106 STAT. 530 “federal supplemental loans for students”. (b) Loan Limits.— Section 428A(b) of the Act is amended by striking paragraphs (1) and (2) and inserting the following: “(1) Annual limit.— Subject to paragraphs (2) and (3), the maximum amount a student may borrow in any academic year or its equivalent or in any period of 7 consecutive months, whichever is longer, is: “(A) In the case of a student at an eligible institution who has not successfully completed the first and second year of a program of undergraduate education— “(i) $4,000, if such student is enrolled in a program whose length is at least one academic year in length (as determined under section 481); “(ii) $2,500, if such student is enrolled in a program whose length is less than one academic year, but at least % of such an academic year; and “(iii) $1,500, if such student is enrolled in a program whose length is less than 2/3, but at least 1/3, of such an academic year. “(B) In the case of a student at an eligible institution who has successfully completed such first and second year but has not successfully completed the remainder of a program of undergraduate study— “(i) $5,000, if such student is enrolled in a program whose length is at least one academic year in length (as determined under section 481); “(ii) $3,325, if such student is enrolled in a program whose length is less than one academic year, but at least 2/3 of such an academic year; and “(iii) $1,675, if such student is enrolled in a program whose length is less than 2/3, but at least 1/3, of such an academic year. “(C) In the case of a graduate or professional student (as defined in regulations of the Secretary) at an eligible institution, $10,000. “(2) Aggregate limit.— The aggregate insured principal amount of insured loans made to any student under this section, minus any interest capitalized under subsection (c), shall not exceed— “(A) $23,000, in the case of any student who has not successfully completed a program of undergraduate education; and “(B) $73,000, in the case of any graduate or professional student, as such terms are defined by regulations issued by the Secretary, including any loans which are insured by the Secretary under this section, or by a guaranty agency, made to such student before the student became a graduate or professional student.”. (c) Coordination of Stafford and SLS Repayment.— Section 428A(c)(1) of the Act is amended by adding at the end the following new sentences: “In the case of a borrower under this section who is also a borrower under a program of student loan insurance covered by an agreement under sections 427 or 428(b), the lender shall notify the borrower of the option to defer the commencement of the repayment for six months after the student ceases to carry at an eligible institution at least one-half the normal full-time 106 STAT. 531academic workload, as determined by the institution, except that interest shall begin to accrue, and shall be paid in accordance with paragraph (2), notwithstanding such delay in the commencement of repayment. The lender shall also notify the borrower of the borrower’s option to commence repayment earlier than the beginning of such repayment period and the difference in total cost to the borrower.”. (d) Capitalization of Interest.— Section 428A(c)(2) of the Act is amended to read as follows: “(2) Capitalization of interest.— (A) Interest on loans made under this section— “(i) which are disbursed in installments, “(ii) for which payments of principal are deferred under sections 427(a)(2)(C)(i) and 428(b)(1)(M)(i), or “(iii) for which the commencement of the repayment period is delayed in accordance with paragraph (1) to coincide with the commencement of the repayment period of a loan made under section 427 or 428, shall, if agreed upon by the borrower and the lender— “(I) be paid monthly or quarterly, or “(II) be added to the principal amount of the loan not more frequently than quarterly by the lender. “(B) Such capitalization of interest shall not be deemed to exceed the annual insurable limit on account of the student.”. (e) Conforming amendment.— Section 428A(c) of the Act is further amended by adding at the end the following new paragraph: “(6) Repayment period.— For purposes of calculating the 10-year repayment period under section 428(b)(1)(D), such period shall commence at the time the first payment of principal is due from the borrower”.