AMOUNTS AND TERMS OF LOANS.

SEC. 464. AMOUNTS AND TERMS OF LOANS. (a) Annual and Aggregate Loan Limits.— Section 464(a)(2) of the Act is amended to read as follows: “(2) (A) Except as provided in paragraph (4), the total of loans made to a student in any academic year or its equivalent by an institution of higher education from a loan fund established pursuant to an agreement under this part shall not exceed— “(i) for institutions that have an agreement with the Secretary to participate in the Expanded Lending Option under section 463(a)(2)(B)(i)— “(I) $4,000, in the case of a student who has not successfully completed a program of undergraduate education; or “(II) $6,000, in the case of a graduate or professional student (as defined in regulations issued by the Secretary), “(ii) for all other institutions— “(I) $3,000, in the case of a student who has not successfully completed a program of undergraduate education; or “(II) $5,000, in the case of a graduate or professional student (as defined in regulations issued by the Secretary). “(B) Except as provided in paragraph (4), the aggregate of the loans for all years made to a student by institutions of higher education from loan funds established pursuant to agreements under this part may not exceed— “(i) for institutions that have an agreement with the Secretary to participate in the Expanded Lending Option under section 463(a)(2)(B)(i)— “(I) $40,000 in the case of any graduate or professional student (as defined by regulations of the Secretary, and including any loans from such funds made to such person before he became a graduate or professional student); “(II) $20,000 in the case of a student who has successfully completed 2 years of a program of education leading to a bachelor’s degree but who has not completed the work necessary for such a degree (determined under regulations of the Secretary, and including any loans from such funds made to such person before he became such a student); and “(III) $8,000 in the case of any other student; or “(ii) for all other institutions— “(I) $15,000, in the case of any student who has not successfully completed a program of undergraduate education; or “(II) $30,000, in the case of any graduate or professional student (as defined by regulations issued by the Secretary) and including any loans from such funds made to such student before the student became a graduate or professional student.”. (b) Study Abroad Limits.— Section 464(a) of the Act is amended by inserting after paragraph (3) the following new paragraph: “(4) In the case of a program of study abroad that is approved for credit by the home institution at which a student is enrolled and that has reasonable costs in excess of the home institution’s budget, the annual and aggregate loan limits for the student may exceed the amounts described in paragraphs (2)(A) and (2)(B) by 20 percent.”. (c) Eligibility.— Section 464(b) of the Act is amended— 106 STAT. 581 (1) in paragraph (1), by striking “this title and who meets the requirements of section 484” and inserting “this title, who meets the requirements of section 484, and who provides the institution with the student’s drivers license number, if any, at the time of application for the loan”; and (2) by amending paragraph (2) to read as follows: “(2) If the institution’s capital contribution under section 462 is directly or indirectly based in part on the financial need demonstrated by students who are (A) attending the institution less than full time, or (B) independent students, and if the total financial need of all such less than full-time and independent students at the institution exceeds 5 percent of the total financial need of all students at such institution, then at least 5 percent of such loans shall be made available to such less than full-time and independent students.”. (d) Minimum Monthly Payments.— Section 464(c)(1)(C) of the Act is amended by striking “$30” each place it appears and inserting “$40”. (e) Elimination of Defense of Infancy.— Section 464(c)(1)(E) of the Act is amended by striking “unless the borrower is a minor and the note or other evidence of obligation executed by him would not, under applicable law, create a binding obligation,”. (f) Deferments.— Section 464(c)(2)(A) is amended to read as follows: “(2) (A) No repayment of principal of, or interest on, any loan from a student loan fund assisted under this part shall be required during any period— “(i) during which the borrower— “(I) is pursuing at least a half-time course of study as determined by an eligible institution; or “(II) is pursuing a course of study pursuant to a graduate fellowship program approved by the Secretary, or pursuant to a rehabilitation training program for disabled individuals approved by the Secretary, except that no borrower shall be eligible for a deferment under this clause, or loan made under this part while serving in a medical internship or residency program; “(ii) not in excess of 3 years during which the borrower is seeking and unable to find full-time employment; “(iii) not in excess of 3 years for any reason which the lender determines, in accordance with regulations prescribed by the Secretary under section 435(o), has caused or will cause the borrower to have an economic hardship; or “(iv) during which the borrower is engaged in service described in section 465(a)(2); and provides that any such period shall not be included in determining the 10-year period described in subparagraph (B).”. (g) Repayment Period.— Section 464(c) of the Act is further amended— (1) in paragraph (2), by striking subparagraphs (B) and (C) and inserting the following: “(B) No repayment or principal of, or interest on, any loan for any period described in subparagraph (A) shall begin until 6 months after the completion of such period.”. (2) by redesignating paragraph (4) as paragraph (5); (3) by inserting after paragraph (3) the following new paragraph: 106 STAT. 582 “(4) The repayment period for a loan made under this part shall begin on the day immediately following the expiration of the period, specified in paragraph (1)(A), after the student ceases to carry the required academic workload, unless the borrower requests and is granted a repayment schedule that provides for repayment to commence at an earlier point in time, and shall exclude any period of authorized deferment, forbearance, or cancellation.”; and (4) by adding at the end thereof the following new paragraph: “(6) Requests for deferment of repayment of loans under this part by students engaged in graduate or post-graduate fellowship-supported study (such as pursuant to a Fullbright grant) outside the United States shall be approved until completion of the period of the fellowship.”. (h) Forbearance; Special Repayment Rule.— Section 464 of the Act is amended by adding at the end the following new subsections: “(e) Forbearance.— The Secretary shall ensure that, upon written request, an institution of higher education shall grant a borrower forbearance of principal and interest or principle only, renewable at 12-month intervals for a period not to exceed 3 years, on such terms as are otherwise consistent with the regulations issued by the Secretary and agreed upon in writing by the parties to the loan, if— “(1) the borrower’s debt burden equals or exceeds 20 percent of such borrower’s gross income; or “(2) the institution determines that the borrower should qualify for forbearance for other reasons. “(f) Special Repayment Rule Authority.— (1) Subject to such restrictions as the Secretary may prescribe to protect the interest of the United States, in order to encourage repayment of loans made under this part which are in default, the Secretary may, in the agreement entered into under this part, authorize an institution of higher education to compromise on the repayment of such defaulted loans in accordance with paragraph (2). The Federal share of the compromise repayment shall bear the same relation to the institutions share of such compromise repayment as the Federal capital contribution to the institution’s loan fund under this part bears to the institution’s capital contribution to such fund. “(2) No compromise repayment of a defaulted loan as authorized by paragraph (1) may be made unless the student borrower pays— “(A) 90 percent of the loan under this part; “(B) the interest due on such loan; and “(C) any collection fees due on such loan; in a lump sum payment.”.