LOAN FEES FROM LENDERS.

SEC. 4103. LOAN FEES FROM LENDERS. Section 438 of the Act (20 U.S.C 1087–1) is further amended— (1) by redesignating subsections (d) and (e) as subsections (e) and (f), respectively; and (2) by inserting after subsection (c) the following new subsection: “(d) Loan Fees From Lenders.— “(1) Deduction from interest and special allowance subsidies.— Notwithstanding subsection (b), the Secretary shall reduce the total amount of interest and special allowance payable under section 428(a)(3)(A) and subsection (b) of this section, respectively, to any holder of a loan by a loan fee in an amount determined in accordance with paragraph (2) of this subsection. If the total amount of interest and special allowance payable under section 428(a)(3)(A) and subsection (b) of this section, respectively, is less than the amount of such loan fee, then the Secretary shall deduct such excess amount from subsequent quarters’ payments until the total amount has been deducted. “(2) Amount of loan fees.— With respect to any loan under this part for which the first disbursement was made on or after October 1, 1993, the amount of the loan fee which shall be deducted under paragraph (1) shall be equal to 0.50 percent of the principal amount of the loan. “(3) Distribution of loan fees.— The Secretary shall deposit all fees collected pursuant to paragraph (3) into the insurance fund established in section 431.”.