PLUS LOAN INTEREST RATES AND ZERO SPECIAL ALLOWANCE PAYMENT.

SEC. 8006. PLUS LOAN INTEREST RATES AND ZERO SPECIAL ALLOWANCE PAYMENT.(a) PLUS Loans.—Section 427A(l)(2) (20 U.S.C. 1077a(l)(2)) is amended by striking “7.9 percent” and inserting “8.5 percent”.(b) Conforming Amendments for Special Allowances.—(1) Amendments.—Subparagraph (I) of section 438(b)(2) (20 U.S.C. 1087–1(b)(2)) is amended—(A) in clause (iii), by striking “, subject to clause (v) of this subparagraph”; (B) in clause (iv), by striking “, subject to clause (vi) of this subparagraph”; and(C) by striking clauses (v), (vi), and (vii) and inserting the following:“(v) Recapture of excess interest.—“(I) Excess credited.—With respect to a loan on which the applicable interest rate is determined under subsection (k) or (l) of section 427A and for which the first disbursement of principal is made on or after April 1, 2006, if the applicable interest rate for any 3-month period exceeds the special allowance support level applicable to such loan under this subparagraph for such period, then an adjustment shall be made by calculating the excess interest in the amount computed under subclause (II) of this clause, and by crediting the excess interest to the Government not less often than annually.“(II) Calculation of excess.—The amount of any adjustment of interest on a loan to be made under this subsection for any quarter shall be equal to—120 STAT. 160“(aa) the applicable interest rate minus the special allowance support level determined under this subparagraph; multiplied by“(bb) the average daily principal balance of the loan (not including unearned interest added to principal) during such calendar quarter; divided by“(cc) four.“(III) Special allowance support level.—For purposes of this clause, the term ‘special allowance support level’ means, for any loan, a number expressed as a percentage equal to the sum of the rates determined under subclauses (I) and (III) of clause (i), and applying any substitution rules applicable to such loan under clauses (ii), (iii), and (iv) in determining such sum.”.(2) Effective date.—The amendments made by this subsection shall not apply with respect to any special allowance payment made under section 438 of the Higher Education Act of 1965 (20 U.S.C. 1087–1) before April 1, 2006.