COMPETITIVE LOAN AUCTION PILOT PROGRAM EVALUATION.

SEC. 499. COMPETITIVE LOAN AUCTION PILOT PROGRAM EVALUATION. Section 499 (20 U.S.C. 1099d) is amended—(1) in subsection (b)(3)—(A) in subparagraph (B)—(i) in clause (i), by striking “and” after the semicolon;(ii) in clause (ii), by striking the period at the end of the sentence and inserting “; and”; and(iii) by adding at the end the following:“(iii) a commitment from such eligible lender that, if the lender has a winning bid under subparagraph (F), the lender will enter into the agreement required under subparagraph (G).”;122 STAT. 3329(B) by striking subparagraph (G) and inserting the following:“(G) Agreement with secretary; compliance.—“(i) Agreement.—Each eligible lender having a winning bid under subparagraph (F) shall enter into an agreement with the Secretary under which the eligible lender—“(I) agrees to originate eligible Federal PLUS Loans under this paragraph to each borrower who—“(aa) seeks an eligible Federal PLUS Loan under this paragraph to enable a dependent student to attend an institution of higher education within the State;“(bb) is eligible for an eligible Federal PLUS Loan; and“(cc) elects to borrow from the eligible lender; and“(II) agrees to accept a special allowance payment (after the application of section 438(b)(2)(I)(v)) from the Secretary with respect to the eligible Federal PLUS Loans originated under subclause (I) in the amount proposed in the second lowest winning bid described in subparagraph (F) for the applicable State auction.“(ii) Compliance.—If an eligible lender with a winning bid under subparagraph (F) fails to enter into the agreement required under clause (i), or fails to comply with the terms of such agreement, the Secretary may sanction such eligible lender through one or more of the following:“(I) The assessment of a penalty on such eligible lender for any eligible Federal PLUS Loans that such eligible lender fails to originate under this paragraph in accordance with the agreement required under clause (i), in the amount of the additional costs (including the amounts of any increase in special allowance payments) incurred by the Secretary in obtaining another eligible lender to originate such eligible Federal PLUS Loans. The Secretary shall collect such penalty by—“(aa) reducing the amount of any payments otherwise due to such eligible lender from the Secretary by the amount of the penalty; or“(bb) requesting any other Federal agency to reduce the amount of any payments due to such eligible lender from such agency by the amount of the penalty, in accordance with section 3716 of title 31, United States Code.“(II) A prohibition of bidding by such lender in other auctions under this section.“(III) The limitation, suspension, or termination of such eligible lender’s participation in the loan program under part B.122 STAT. 3330“(IV) Any other enforcement action the Secretary is authorized to take under part B.”; and(C) by striking subparagraph (J) and inserting the following:“(J) Guarantee against losses.—Each eligible Federal PLUS Loan originated under this paragraph shall be insured by a guaranty agency in accordance with part B, except that, notwithstanding section 428(b)(1)(G), such insurance shall be in an amount equal to 99 percent of the unpaid principal and interest due on the loan.”; and(2) by adding at the end the following new subsections:“(c) Required Initial Evaluation.—The Secretary and Secretary of the Treasury shall jointly conduct an evaluation, in consultation with the Office of Management and Budget, the Congressional Budget Office, and the Comptroller General, of the pilot program carried out by the Secretary under this section. The evaluation shall determine—“(1) the extent of the savings to the Federal Government that are generated through the pilot program, compared to the cost the Federal Government would have incurred in operating the PLUS loan program under section 428B in the absence of the pilot program;“(2) the number of lenders that participated in the pilot program, and the extent to which the pilot program generated competition among lenders to participate in the auctions under the pilot program;“(3) the number and volume of loans made under the pilot program in each State;“(4) the effect of the transition to and operation of the pilot program on the ability of—“(A) lenders participating in the pilot program to originate loans made through the pilot program smoothly and efficiently;“(B) institutions of higher education participating in the pilot program to disburse loans made through the pilot program smoothly and efficiently; and“(C) parents to obtain loans made through the pilot program in a timely and efficient manner;“(5) the differential impact, if any, of the auction among the States, including between rural and non-rural States; and“(6) the feasibility of using the mechanism piloted to operate the other loan programs under part B of this title.“(d) Reports.—“(1) In general.—The Secretary and the Secretary of the Treasury shall submit to the authorizing committees—“(A) not later than September 1, 2010, a preliminary report regarding the findings of the evaluation described in subsection (c);“(B) not later than September 1, 2012, an interim report regarding such findings; and“(C) not later than September 1, 2013, a final report regarding such findings.“(2) Contents.—The Secretary shall include, in each report required under subparagraphs (A), (B), and (C) of paragraph (1), any recommendations, that are based on the findings of the evaluation under subsection (c), for—122 STAT. 3331“(A) improving the operation and administration of the auction; and“(B) improving the operation and administration of other loan programs under part B.”.