PRESERVING LOAN ACCESS.

SEC. 4041. PRESERVING LOAN ACCESS. (a) Advances to Guaranty Agencies for Lender-of-Last-Resort Services.— (1) Amendment.— Section 428(j) of the Act (20 U.S.C. 1078(i)) is amended by striking paragraph (3) and inserting the following: “(3) Advances to guaranty agencies for lender-of-last-resort services during transition to direct lending.— (A) In order to ensure the availability of loan capital during the transition from the Federal Family Education Loan Program under this part to the Federal Direct Student Loan Program under part D of this title, the Secretary is authorized to provide a guaranty agency with additional advance funds in accordance with section 422(c)(7), with such restrictions on the use of such funds as are determined appropriate by the Secretary, in order to ensure that the guaranty agency will make loans as the lender-of-last-resort. Such agency shall make such loans in accordance with this subsection and the requirements of the Secretary. “(B) Notwithstanding any other provision in this part, a guaranty agency serving as a lender-of-last-resort under this paragraph shall be paid a fee, established by the Secretary, for making such loans in lieu of interest and special allowance subsidies, and shall be required to assign such loans to the Secretary on demand. Upon such assignment, the portion of the advance represented by the loans assigned shall be considered repaid by such guaranty agency.”. (2) Conforming amendments.— (A) Advances to guarantee agencies.— Section 422(c)(7) of the Act (20 U.S.C. 1072(c)(7)) is amended by striking all beginning with “to a guaranty agency” through the period and inserting “to a guaranty agency— “(A) in accordance with section 428(j), in order to ensure that the guaranty agency shall make loans as the lender-of-last-resort during the transition from the Federal Family Education Loan Program under this part to the Federal Direct Student Loan Program under part D of this title; or “(B) if the Secretary is seeking to terminate the guaranty agency’s agreement, or assuming the guaranty agency’s functions, in accordance with section 428(c)(10)(F)(v), in order to assist the agency in meeting its immediate 107 STAT. 355cash needs, ensure the uninterrupted payment of claims, or ensure that the guaranty agency shall make loans as described in subparagraph (A);”. (B) Rules and operating procedures.— Section 428(j)(2) of the Act (20 U.S.C. 1078(j)(2)) is amended— (i) in subparagraph (A), by inserting before the semicolon at the end the following: “and ensure a response within 60 days after the student’s original complete application is filed under this subsection”; (ii) by redesignating subparagraphs (B) through (D) as subparagraphs (C) through (E), respectively; and (iii) by inserting after subparagraph (A) the following new subparagraph: “(B) consistent with standards established by the Secretary, students applying for loans under this subsection shall not be subject to additional eligibility requirements or requests for additional information beyond what is required under this title in order to receive a loan under this part from an eligible lender, nor be required to receive more than two rejections from eligible lenders in order to obtain a loan under this subsection;”. (b) Lender Referral Services.— Section 428(e) of the Act (20 U.S.C. 1078(e)) is amended— (1) in paragraph (1)— (A) by amending the paragraph heading to read as follows: “In general; agreements with guaranty agencies.—”; (B) by inserting the subparagraph designation “(A)” immediately before “The Secretary”; (C) by striking “in any State” and inserting “with which the Secretary has an agreement under subparagraph (B)”; and (D) by adding at the end the following new subparagraph: “(B) (i) The Secretary may enter into agreements with guaranty agencies that meet standards established by the Secretary to provide lender referral services in geographic areas specified by the Secretary. Such guaranty agencies shall be paid in accordance with paragraph (3) for such services. “(ii) The Secretary shall publish in the Federal Register whatever standards, criteria, and procedures, consistent with the provisions of this part and part D of this title, the Secretary determines are reasonable and necessary to provide lender referral services under this subsection and ensure loan access to student and parent borrowers during the transition from the loan programs under this part to the direct student loan programs under part D of this title. Section 431 of the General Education Provisions Act shall not apply to the publication of such standards, criteria, and procedures.”; (2) in paragraph (2)— (A) in the matter preceding subparagraph (A), by striking “in a State” and inserting “with which the Secretary has an agreement under paragraph (1)(B)”; (B) by amending subparagraph (A) to read as follows: “(A) (i) such student is either a resident of, or is accepted for enrollment in, or is attending, an eligible 107 STAT. 356institution located in a geographic area for which the Secretary (I) determines that loans are not available to all eligible students, and (II) has entered into an agreement with a guaranty agency under paragraph (1)(B) to provide lender referral services; and”; (3) in paragraph (3), by striking “The” and inserting “From funds available for costs of transition under section 458 of the Act, the”; and (4) by striking paragraph (5). (c) Lender-of-Last-Resort Functions of Student Loan Marketing Association.— Subsection (q) of section 439 of the Act (20 U.S.C. 1087–2(q)) is amended to read as follows: “(q) Lender-of-Last-Resort.— “(1) Action at request of secretary.— (A) Whenever the Secretary determines that eligible borrowers are seeking and are unable to obtain loans under this part, the Association or its designated agent shall, not later than 90 days after the date of enactment of the Student Loan Reform Act of 1993, begin making loans to such eligible borrowers in accordance with this subsection at the request of the Secretary. The Secretary may request that the Association make loans to borrowers within a geographic area or for the benefit of students attending institutions of higher education that certify, in accordance with standards established by the Secretary, that their students are seeking and unable to obtain loans. “(B) Loans made pursuant to this subsection shall be insurable by the Secretary under section 429 with a certificate of comprehensive insurance coverage provided for under section 429(b)(1) or by a guaranty agency under paragraph (2)(A) of this subsection. “(2) Issuance and coverage of loans.— (A) Whenever the Secretary, after consultation with, and with the agreement of, representatives of the guaranty agency in a State, or an eligible lender in a State described in section 435(d)(1)(D), determines that a substantial portion of eligible borrowers in such State or within an area of such State are seeking and are unable to obtain loans under this part, the Association or its designated agent shall begin making such loans to borrowers in such State or within an area of such State in accordance with this subsection at the request of the Secretary. “(B) Loans made pursuant to this subsection shall be insurable by the agency identified in subparagraph (A) having an agreement pursuant to section 428(b). For loans insured by such agency, the agency shall provide the Association with a certificate of comprehensive insurance coverage, if the Association and the agency have mutually agreed upon a means to determine that the agency has not already guaranteed a loan under this part to a student which would cause a subsequent loan made by the Association to be in violation of any provision under this part. “(3) Termination of lending.— The Association or its designated agent shall cease making loans under this subsection at such time as the Secretary determines that the conditions which caused the implementation of this subsection have ceased to exist.”.