ADMINISTRATIVE PROVISIONS.

SEC. 426. ADMINISTRATIVE PROVISIONS. (a) Authority To Regulate Servicers.— Section 432(a)(1) of the Act (20 U.S.C. 1082) is amended by inserting before the semicolon the following: “, including regulations applicable to third party servicers (including regulations concerning financial responsibility standards for, and the assessment of liabilities for program violations against, such servicers) to establish minimum standards with respect to sound management and accountability of programs under this part, except that in no case shall damages be assessed 106 STAT. 544against the United States for the actions or inactions of such servicers”. (b) Agency Procedure.— Section 432 of the Act is amended— (1) in subsection (a)(3), by striking “on the record”; (2) in subsection (g)(l), by striking “on the record”; (3) in subsection (h)(2)(A), by striking out “shall, in accordance with sections 556 and 557 of title 5, United States Code,” in the first sentence and inserting “shall”; and (4) in subsection (h)(3)(A), by striking out “shall, in accordance with sections 556 and 557 of title 5, United States Code,” in the first sentence and inserting “shall”. (c) Civil Penalties.— Section 432(g) of the Act is further amended— (1) by amending paragraph (2) to read as follows: “(2) Limitations.— No civil penalty may be imposed under paragraph (1) of this subsection unless the Secretary determines that— “(A) the violation, failure, or substantial misrepresentation referred to in that paragraph resulted from a violation, failure, or misrepresentation that is material; and “(B) the lender or guaranty agency knew or should have known that its actions violated or failed to carry out the provisions of this part or the regulations thereunder.”; (2) in paragraph (3), by striking “the institution of an action under that paragraph” and inserting “notification by the Secretary under that paragraph”; and (3) in paragraph (4)— (A) by inserting “, and occurring prior to notification by the Secretary under that paragraph,” after “guaranty agency”; and (B) by striking “or both, and the” and inserting “or both. The”. (d) LS&T Authority.— Section 432(h) of the Act is amended— (1) in paragraph (2)(A), by striking “The Secretary” and all that follows through “disqualification—” in the second sentence and inserting the following: “The Secretary shall uphold the imposition of such limitation, suspension, or termination in the student loan insurance program of each of the guaranty agencies under this part, and shall notify such guaranty agencies of such sanction—”; (2) in paragraph (2)(B), by striking “disqualification” each place it appears and inserting “sanction”; and (3) by redesignating subparagraph (B) of paragraph (2) as subparagraph (C), and by inserting after subparagraph (A) the following new subparagraph: “(B) The Secretary’s review under this paragraph of the limitation, suspension, or termination imposed by a guaranty agency pursuant to section 428(b)(l)(U) shall be limited to— “(i) a review of the written record of the proceedings in which the guaranty agency imposed such sanctions; and “(ii) a determination as to whether the guaranty agency complied with section 428(b)(1)(U) and any notice and hearing requirements prescribed in regulations of the Secretary under this part.”; 106 STAT. 545 (4) in paragraph (3)(A), by striking out “The Secretary” and all that follows through “disqualification—” in the second sentence and inserting the following: “The Secretary shall uphold the imposition of such limitation, suspension, or termination in the student loan insurance program of each of the guaranty agencies under this part, and shall notify such guaranty agencies of such sanctions—; (5) in subsection (h)(3)(B), by striking “disqualification” each place such term appears and inserting “sanction”; and (6) by redesignating subparagraph (B) of subsection (h)(3) as subparagraph (C) of such subsection, and by inserting after subparagraph (A) the following new subparagraph: “(B) The Secretary’s review under this paragraph of the limitation, suspension, or termination imposed by a guaranty agency pursuant to section 428(b)(1)(T) shall be limited to— “(i) a review of the written record of the proceedings in which the guaranty agency imposed such sanctions; and “(ii) a determination as to whether the guaranty agency complied with section 428(b)(1)(T) and any notice and hearing requirements prescribed in regulations of the Secretary under this part.”. (e) Additional Legal Powers and Responsibilities.— Section 432 of the Act is amended by adding at the end the following new subsections: “(k) Program of Assistance for Borrowers.— “(1) In general.— The Secretary shall undertake a program to encourage corporations and other private and public employers, including the Federal Government, to assist borrowers in repaying loans received under this title, including providing employers with options for payroll deduction of loan payments and offering loan repayment matching provisions as part of employee benefit packages. “(2) Publication.— The Secretary shall publicize models for providing the repayment assistance described in paragraph (1) and each year select entities that deserve recognition, through means devised by the Secretary, for the development of innovative plans for providing such assistance to employees. “(3) Recommendation.— Within 1 year after the date of enactment of the Higher Education Amendments of 1992, the Secretary shall recommend to the appropriate committees in the Senate and House of Representatives changes to statutes that could be made in order to further encourage such efforts. “(l) Uniform Administrative and Claims Procedures.— “(1) In general.— The Secretary shall, by regulation developed in consultation with guaranty agencies, lenders, institutions of higher education, secondary markets, students, third party servicers and other organizations involved in providing loans under this part, prescribe standardized forms and procedures regarding— “(A) origination of loans; “(B) electronic funds transfer; “(C) guaranty of loans; “(D) deferments; “(E) forbearance; “(F) servicing; “(G) claims filing; 106 STAT. 546 “(H) borrower status change; and “(I) cures. “(2) Special rules.— (A) The forms and procedures described in paragraph (1) shall include all aspects of the loan process as such process involves eligible lenders and guaranty agencies and shall be designed to minimize administrative costs and burdens (other than the costs and burdens involved in the transition to new forms and procedures) involved in exchanges of data to and from borrowers, schools, lenders, secondary markets, and the Department. “(B) Nothing in this paragraph shall be construed to limit the development of electronic forms and procedures. “(3) Simplification requirements.— Such regulations shall include— “(A) standardization of computer formats, forms design, and guaranty agency procedures relating to the origination, servicing, and collection of loans made under this part; “(B) authorization of alternate means of document retention, including the use of microfilm, microfiche, laser disc, compact disc, and other methods allowing the production of a facsimile of the original documents; “(C) authorization of the use of computer or similar electronic methods of maintaining records relating to the performance of servicing, collection, and other regulatory requirements under this Act; and “(D) authorization and implementation of electronic data linkages for the exchange of information to and from lenders, guarantors, institutions of higher education, third servicers, and the Department of Education for student status confirmation reports, claim filing, interest and special allowance billing, deferment processing, and all other administrative steps relating to loans made pursuant to this part where using electronic data linkage is feasible. “(4) Additional recommendations.— The Secretary shall review regulations prescribed pursuant to paragraph (1) and seek additional recommendations from guaranty agencies, lenders, institutions of higher education, students, secondary markets, third party servicers and other organizations involved in providing loans under this part, not less frequently than annually, for additional methods of simplifying and standardizing the administration of the programs authorized by this part. “(m) Common Forms and Formats.— “(1) Common guaranteed student loan application form and promissory note.— “(A) In general.— The Secretary, in cooperation with representatives of guaranty agencies, eligible lenders, and organizations involved in student financial assistance, shall prescribe a common application form and promissory note to be used for applying for loans under part B of this title. “(B) Requirements.— The form prescribed by the Secretary shall— “(i) use clear, concise, and simple language to facilitate understanding of loan terms and conditions by applicants; “(ii) be formatted to require the applicant to clearly indicate a choice of lender; and 106 STAT. 547 “(iii) permit, to the maximum extent practicable, application for any loan under part B. “(C) Approval of form.— The Secretary shall approve a form for use not later than 360 days after the date of enactment of the Higher Education Amendments of 1992. “(D) Special rule.— Nothing in this section shall be construed to limit the development of electronic forms and procedures. “(2) Common deferment form.— The Secretary, in cooperation with representatives of guaranty agencies, institutions of higher education, and lenders involved in loans made under part B of this title, shall prescribe a common deferment reporting form to be used for the processing of deferments of loans made under this title. “(3) Common reporting formats.— The Secretary shall promulgate standards including necessary rules, regulations (including the definitions of all relevant terms), and procedures so as to require all lenders and guaranty agencies to report information on all aspects of loans made under this part in uniform formats, so as to permit the direct comparison of data submitted by individual lenders, servicers, or guaranty agencies. “(n) Default Reduction Management.— “(1) Authorization.— There are authorized to be appropriated $25,000,000 for fiscal year 1993 and each of the four succeeding fiscal years, for the Secretary to expend for default reduction management activities for the purposes of establishing a performance measure that will reduce defaults by 5 percent relative to the prior fiscal year. Such funds shall be m addition to, and not in lieu of, other appropriations made for such purposes. “(2) Allowable activities.— Allowable activities for which such funds shall be expended by the Secretary shall include the following: (A) program reviews; (B) audits; (C) debt management programs; (D) training activities; and (E) such other management improvement activities approved by the Secretary. “(3) Plan for use required.— The Secretary shall submit a plan, for inclusion in the materials accompanying the President’s budget each fiscal year, detailing the expenditure of funds authorized by this section to accomplish the 5 percent reduction in defaults. At the conclusion of the fiscal year, the Secretary shall report the Secretary’s findings and activities concerning the expenditure of funds and whether the performance measure was met. If the performance measure was not met, the Secretary shall report the following: “(A) why the goal was not met, including an indication of any managerial deficiencies or of any legal obstacles: “(B) plans and a schedule for achieving the established performance goal; “(C) recommended legislative or regulatory changes necessary to achieve the goal; and “(D) if the performance standard or goal is impractical or infeasible, why that is the case and what action is recommended, including whether the goal should be changed or the program altered or eliminated. This report shall be submitted to the Appropriations Committees of the House of Representatives and the Senate and to 106 STAT. 548the Committee on Education and Labor of the House of Representatives and the Committee on Labor and Human Resources of the Senate. “(o) Consequences of Guaranty Agency Insolvency.— In the event that the Secretary has determined that a guaranty agency is unable to meet its insurance obligations under this part, the holder of loans insured by the guaranty agency may submit insurance claims directly to the Secretary and the Secretary shall pay to the holder the full insurance obligation of the guaranty agency, in accordance with insurance requirements no more stringent than those of the guaranty agency. Such arrangements shall continue until the Secretary is satisfied that the insurance obligations have been transferred to another guarantor who can meet those obligations or a successor will assume the outstanding insurance obligations. “(p) Reporting Requirement.— All officers and directors, and those employees and paid consultants of eligible institutions, eligible lenders, guaranty agencies, loan servicing agencies, accrediting agencies or associations, State licensing agencies or boards, State postsecondary reviewing entities designated under subpart 1 of part H, and entities acting as secondary markets (including the Student Loan Marketing Association), who are engaged in making decisions as to the administration of any program or funds under this title or as to the eligibility of any entity or individual to participate under this title, shall report to the Secretary, in such manner and at such time as the Secretary shall require, on any financial interest which such individual may hold in any other entity participating in any program assisted under this title.”.