SPECIAL ALLOWANCES.

SEC. 430. SPECIAL ALLOWANCES. (a) Special Allowance.— Section 438(b)(2) of the Act is amended— (1) in subparagraph (A)(iii), by striking “3.25” and inserting “3.10”; (2) by adding at the end of subparagraph (A) the following new sentence: “If such computation produces a number less than zero, such loans shall be subject to section 427A(e).”; (3) in subparagraph (B)(i), by striking “3.25” and inserting “3.10”; and (4) by striking division (ii) of subparagraph (B) and inserting the following: “(ii) The quarterly rate of the special allowance set under division (i) of this subparagraph shall not be less than 9.5 percent minus the applicable interest rate on such loans, divided by 4.”; (5) in subparagraph (C)— (A) by inserting “before October 1, 1992,” after “made”; (B) by inserting “(i)” before “In”; and (C) by adding at the end the following new clause: “(ii) In the case of loans disbursed on or after October 1, 1992, pursuant to section 428A or 428B for which the interest rate is determined under section 427A(c)(4), a special allowance shall not be paid unless the rate determined for any 12-month period under section 427A(c)(4)(B) exceeds— “(I) 11 percent in the case of a loan under section 428A; or “(II) 10 percent in the case of a loan under section 428B.”; (6) in subparagraph (D)(i), by striking “3.25” and inserting “3.10”. (b) Special Allowance Permitted on Unsubsidized Loans.— Section 438(b)(5)(A)(ii) of the Act is amended by inserting “428H,” after “428C,”. (c) Special Rule.— Section 438(b)(5) is amended by adding at the end thereof the following flush sentence: “As used in this section, the term ‘eligible loan’ includes all loans subject to section 4281.”. (d) Origination Fees.— Section 438(c) is amended— (1) in paragraph (2), by striking “With” and inserting “Subject to paragraph (6) of this subsection, with”; and (2) by adding at the end the following new paragraphs: “(6) SLS and PLUS loans.— With respect to any loans made under section 428A or 428B on or after October 1, 1992, each eligible lender under this part shall charge the borrower an origination fee of 5 percent of the principal amount of the loan, to be deducted proportionately from each installment pay-106 STAT. 554ment of the proceeds of the loan prior to payments to the borrower. “(7) Distribution of origination fees.— All origination fees collected pursuant to this section on loans authorized under section 428A or 428B shall be paid to the Secretary by the lender and deposited in the fund authorized under section 431 of this part.”. (e) Discounting.— Section 438(d)(2)(C) of the Act is amended by striking “or discount”.