TEMPORARY STUDENT LOAN PROVISION.

SEC. 8301. TEMPORARY STUDENT LOAN PROVISION. (a) FFEL Interest Rates.— (1) Amendment.— Section 427A of the Higher Education Act of 1965 (20 U.S.C. 1077a) is amended— (A) by redesignating subsections (j) and (k) as subsections (k) and (1), respectively; and (B) by inserting after subsection (i) the following new subsection: “(j) Interest Rates for New Loans Between July 1, 1998 and October 1,1998.— “(1) In general.— Notwithstanding subsection (h), but subject to paragraph (2), with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to section 428B or 428C) for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to— “(A) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus “(B) 2.3 percent, except that such rate shall not exceed 8.25 percent. “(2) In school and grace period rules.— Notwithstanding subsection (h), with respect to any loan under this part (other than a loan made pursuant to section 428B or 428C) for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, the applicable rate of interest for interest which accrues— “(A) prior to the beginning of the repayment period of the loan; or “(B) during the period in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in section 428(b)(1)(M) or 427(a)(2)(C), shall be determined under paragraph (1) by substituting ‘1.7 percent’ for ‘2.3 percent’. “(3) PLUS loans.— Notwithstanding subsection (h), with respect to any loan under section 428B for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to the lesser of— “(A) (i) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus “(ii) 3.1 percent; or “(B) 9.0 percent. “(4) Consultation.— The Secretary shall determine the applicable rate of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such 112 STAT. 497rate in the Federal Register as soon as practicable after the date of determination.”. (2) Conforming amendment.— Section 428B(d)(4) (20 U.S.C. 1078–2(d)(4)) is amended by striking “section 427A(c)” and inserting “section 427A for loans made under this section”. (b) Special Allowances.— (1) Amendment.— Section 438(b)(2) of the Higher Education Act of 1965 (20 U.S.C. 1087–1(b)(2)) is amended by adding at the end the following new subparagraph: “(G) Loans disbursed between july 1, 1998, and october 1, 1998.— “(i) In general.— Subject to paragraph (4) and clauses (ii), (iii), and (iv) of this subparagraph, and except as provided in subparagraph (B), the special allowance paid pursuant to this subsection on loans for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, shall be computed— “(I) by determining the average of the bond equivalent rates of 91-day Treasury bills auctioned for such 3-month period; “(II) by subtracting the applicable interest rates on such loans from such average bond equivalent rate; “(III) by adding 2.8 percent to the resultant percent; and “(IV) by dividing the resultant percent by 4. “(ii) In school and grace period.— In the case of any loan for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, and for which the applicable rate of interest is described in section 427A(j)(2), clause (i)(III) of this subparagraph shall be applied by substituting ‘2.2 percent’ for ‘2.8 percent’. “(iii) PLUS loans.— In the case of any loan for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, and for which the applicable rate of interest is described in section 427A(j)(3), clause (i)(III) of this subparagraph shall be applied by substituting ‘3.1 percent’ for ‘2.8 percent’, subject to clause (v) of this subparagraph. “(iv) Consolidation loans.— This subparagraph shall not apply in the case of any consolidation loan. “(v) Limitation on special allowances for PLUS loans.— In the case of PLUS loans made under section 428B and disbursed on or after July 1, 1998, and before October 1, 1998, for which the interest rate is determined under 427A(j)(3), a special allowance shall not be paid for such loan for such unless the rate determined under subparagraph (A) of such section (without regard to subparagraph (B) of such section) exceeds 9.0 percent”. (2) Conforming amendments.— Section 438(b)(2) of such Act is further amended— (A) in subparagraph (A), by striking “(E), and (F)” and inserting “(E), (F), and (G)”; (B) in subparagraph (B)(iv), by striking “(E), and (F)” and inserting “(E), (F), or (G)”; and (C) in subparagraph (C)(ii), by striking “In the case” and inserting “Subject to subparagraph (G), in the case”. 112 STAT. 498 (c) Direct Loan Interest Rates.— Section 455(b) (20 U.S.C. 1087e(b)) is amended— (1) by redesignating paragraph (5) as paragraph (6); and (2) by inserting after paragraph (4) the following new paragraph: “(5) Temporary interest rate provision.— “(A) Rates for fdsl and fdusl.— Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to— “(i) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus “(ii) 2.3 percent, except that such rate shall not exceed 8.25 percent. “(B) In school and grace period rules.— Notwithstanding the preceding paragraphs of this subsection, with respect to any Federal Direct Stafford Loan or Federal Direct Unsubsidized Stafford Loan for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, the applicable rate of interest for interest which accrues— “(i) prior to the beginning of the repayment period of the loan; or “(ii) during the period in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in section 428(b)(1)(M) or 427(a)(2)(C), shall be determined under subparagraph (A) by substituting ‘1.7 percent’ for 2.3 percent’. “(C) PLUS loans.— Notwithstanding the preceding paragraphs of this subsection, with respect to Federal Direct PLUS Loan for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, the applicable rate of interest shall be determined under subparagraph (A)— “(i) by substituting ‘3.1 percent’ for ‘2.3 percent’; and “(ii) by substituting ‘9.0 percent’ for ‘8.25 percent’.”.