CONSOLIDATION LOANS.

SEC. 419. CONSOLIDATION LOANS. (a) Name of the Program.— Section 428C of the Act (20 U.S.C. 1078–3) is amended by striking the heading of such section and inserting the following: “federal consolidation loans”. (b) Use of Consolidation to Avoid Default.— (1) Eligible borrower.— (A) Section 428C(a)(3)(A)(i) is amended by striking “$5,000” and inserting “$7,500”. (B) Section 428C(a)(3)(A)(ii) is amended to read as follows: “(ii) is in repayment status, or in a grace period preceding repayment, or is a delinquent or defaulted borrower who will reenter repayment through loan consolidation.”. (2) Eligible loans.— Section 428C(a)(4)(A) of the Act is amended to read as follows: “(A) made, insured, or guaranteed under this part, including loans on which the borrower has defaulted (but has made arrangements to repay the obligation on the defaulted loans satisfactory to the Secretary or guaranty agency, whichever insured the loans), except for loans made to parent borrowers under section 428B as in effect prior to the enactment of the Higher Education Amendments of 1986;”. (c) Extension of Consolidation Eligibility Period.— Section 428C(a)(3)(B) of the Act is amended to read as follows: “(B) (i) An individual’s status as an eligible borrower under this section terminates upon receipt of a consolidation loan under this section, except— “(I) with respect to eligible student loans received after the date of receipt of the consolidation loan; and “(II) that loans received prior to the date of the consolidation loan may be added to the consolidation loan during the 180-day period following the making of the consolidation loan. “(ii) Loans made under this section shall, to the extent used to discharge loans made under this title, be counted against 106 STAT. 533applicable limitations on aggregate indebtedness contained in sections 425(a)(2), 428(b)(1)(B), 428A(b)(2), and 464(a)(2). Nothing in this section shall be interpreted to authorize the Secretary to require lenders, holders, or guarantors of consolidated loans to receive, to maintain, or to make reports with respect to preexisting records relating to any eligible student loan (as defined under paragraph (4)) discharged by a borrower in receiving a consolidation loan.”. (d) Consolidation of Loans of Married Borrowers.— Section 428C(a)(3) of the Act is amended by adding at the end the following new subparagraph: “(C) (i) A married couple, each of whom has eligible student loans, may be treated as if such couple were an individual borrowing under subparagraphs (A) and (B) if such couple agrees to be held jointly and severally liable for the repayment or a consolidation loan, without regard to the amounts of the respective loan obligations that are to be consolidated, and without regard to any subsequent change that may occur in such couple’s marital status. “(ii) Only one spouse in a married couple applying for a consolidation loan under this subparagraph need meet any of the requirements of subsection (b) of this section, except that each spouse shall— “(I) individually make the initial certification that no other application is pending in accordance with subsection (b)(1)(A); and “(II) agree to notify the holder concerning any change of address in accordance with subsection (b)(4).”. (e) Interest During Deferral.— Section 428C(b)(4)(C) of the Act is amended to read as follows: “(C) provides that periodic installments of principal need not be paid, but interest shall accrue and be paid by the Secretary, during any period for which the borrower would be eligible for a deferral under section 428(b)(l)(M), and that any such period shall not be included in determining the repayment period pursuant to subsection (c)(2) of this section;”. (f) Repayment Schedules.— Section 428C(c)(2) of the Act is amended by— (1) in the first sentence, by striking “may” and inserting “shall”; and (2) by striking the second sentence and inserting the following: “Such repayment terms shall require that if the sum of the consolidation loan and the amount outstanding on other student loans to the individual— “(i) is equal to or greater than $7,500 but less than $10,000, then such consolidation loan shall be repaid in not more than 12 years; “(ii) is equal to or greater than $10,000 but less than $20,000, then such consolidation loan shall be repaid in not more than 15 years; “(iii) is equal to or greater than $20,000 but less than $40,000, then such consolidation loan shall be repaid in not more than 20 years; “(iv) is equal to or greater than $40,000 but less than $60,000, then such consolidation loan shall be repaid in not more than 25 years; or 106 STAT. 534 “(v) is equal to or greater than $60,000, then such consolidation loan shall be repaid in not more than 30 years.”. (g) Extension of Authority.— Section 428C(d) of the Act is amended by striking “September 30, 1992” and inserting “September 30, 1998”.