PLUS LOANS.

SEC. 418. PLUS LOANS. (a) Name of the Program.— Section 428B of the Act (20 U.S.C. 1078–2) is amended by striking the heading of such section and inserting the following: “federal plus loans.” (b) Checks Copayable.— Section 428B of the Act is amended— (1) in subsection (a)— (A) by striking “subsections (c) and (d)” and inserting “subsections (c), (d), and (e)”; and (B) by inserting after “Parents of a dependent student” the following: “, who do not have an adverse credit history as determined pursuant to regulations of the Secretary,”; and (2) in subsection (b)— (A) by striking the subsection designation and heading and paragraphs (1) and (2); and (B) by redesignating paragraph (3) as subsection (b); (3) by redesignating subsections (c) and (d) as subsections (d) and (e), respectively; and (4) by inserting after subsection (b) the following new subsection: “(c) Plus Loan Disbursement.— All loans made under this section shall be disbursed by— (5) ) an electronic transfer of funds from the lender to the eligible institution; or 106 STAT. 532 “(2) a check copayable to the eligible institution and the parent borrower.”. (c) Limitation of Deferral.— Section 428B(d)(l) of the Act (as redesignated in paragraph (3)) is amended to read as follows: “(1) Commencement of repayment.— Repayment of principal on loans made under this section shall commence not later than 60 days after the date such loan is disbursed by the lender, subject to deferral during any period during which the parent meets the conditions required for a deferral under section 427(a)(2)(C) or 428(b)(1)(M).”. (d) Capitalization of Interest.— Section 428B(d)(2) of the Act (as redesignated in paragraph (3)) is amended to read as follows: “(2) Capitalization of interest.— Interest on loans made under this section for which payments of principal are deferred pursuant to paragraph (1) of this subsection shall, if agreed upon by the borrower and the lender (A) be paid monthly or quarterly, or (B) be added to the principal amount of the loan not more frequently than quarterly by the lender. Such capitalization of interest shall not be deemed to exceed the annual insurable limit on account of the borrower.”.