,,ii  #aag? ,,congress  #b;d ,session   
,s4 #ejfe  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,septemb] #bi1         
#bjbb,mr4 ,re$ 7= himself1 ,ms4 ,w>r51 &
 ,mr4 ,durb97 introduc$ ! foll[+ bill2  
:i* 0 read twice & ref]r$ to !          
,committee on ,heal?1 ,education1       
,labor1 & ,p5sions  ,a ,,bill  ,to      
provide = in/itutional risk-%>+ 9 !     
,f$]al /ud5t loan programs4  #a4 ,%ort  
title ,?is ,act may be cit$ z ! ,protect
 ,/ud5t ,borr[]s ,act ( #bjbb4  #b4     
,purpose ,! purpose ( ?is ,act is to    
protect /ud5t loan borr[]s & taxpay]s by
 requir+ in/itutions ( high] education  
to assume "s ( ! co/s ( default = /ud5t 
loans "u "p ,d ( title ,,iv ( ! ,high]  
,education ,act ( #aife 7#bj ,u4,s4,c4  
#ajhg;a et seq474  #c4 ,in/itutional    
rebates to ! ,dep>tm5t ( ,education =   
default$ loans ,section #ded ( ! ,high] 
,education ,act ( #aifd 7#bj ,u4,s4,c4  
#ajhg;d7 is am5d$-- 7#a7 9 subsection   
7a7-- 7,a7 9 p>agraph 7#e71 by /rik+ &  
aft] ! semicolon2  7,b7 9 p>agraph 7#f71

 by /rik+ ! p]iod at ! end & ins]t+ 2 &2
 &  7,c7 by add+ at ! end ! foll[+3     
7#g7 provide t ! in/itution accepts !   
in/itutional risk-%>+ requirem5ts "u    
subsection 7d71 if applicable4  2 &     
7#b7 by add+ at ! end ! foll[+3  7d7    
,in/itutional risk-,%>+ = /ud5t loan    
defaults  7#a7 ,9 g5]al ,subject to     
p>agraph 7#c71 ea* in/itution ( high]   
education p>ticipat+ 9 ! direct /ud5t   
loan program "u ?is "p = a fiscal ye> t 
has a rate ( p>ticipation 9 su* program 
= all /ud5ts enroll$ at t in/itution =  
su* fiscal ye> t is #cc p]c5t or high]  
or a cohort repaym5t rate ( #ej p]c5t or
 l[] %all remit1 at su* times z !       
,secret>y may specify1 a risk-%>+ paym5t
 bas$ on a p]c5tage ( ! volume ( /ud5t  
loans "u ?is "p t are 9 default1 z      
det]m9$ "u p>agraph 7#b74  7#b7         
,det]m9ation ( risk-%>+ paym5ts ,subject
 to p>agraph 7#c71 ) respect to ea*     
fiscal ye>1 an in/itution ( high]       
education describ$ 9 p>agraph 7#a7 t has
 a cohort default rate 7z def9$ 9       

section #dce7m77-- 7,a7 t is #bj p]c5t  
or high] = ! mo/ rec5t fiscal ye> = :i* 
data are available1 %all pay to !       
,secret>y = ! fiscal ye> an am\nt t is  
equal to #bj p]c5t ( ! total am\nt ow$  
on loans by borr[]s f ! cov]$ cohort t  
are 9 default2  7,b7 t is l[] ?an #bj   
p]c5t b n l[] ?an #ae p]c5t = ! mo/     
rec5t fiscal ye> = :i* data are         
available1 %all pay to ! ,secret>y = !  
fiscal ye> an am\nt t is equal to #ae   
p]c5t ( ! total am\nt ow$ on loans by   
borr[]s f ! cov]$ cohort t are 9        
default2  7,c7 t is l[] ?an #ae p]c5t b 
n l[] ?an #aj p]c5t = ! mo/ rec5t fiscal
 ye> = :i* data are available1 %all pay 
to ! ,secret>y = ! fiscal ye> an am\nt t
 is equal to #aj p]c5t ( ! total am\nt  
ow$ on loans by borr[]s f ! cov]$ cohort
 t are 9 default2 or  7,d7 t is l[] ?an 
#aj p]c5t b n l[] ?an #e p]c5t = ! mo/  
rec5t fiscal ye> = :i* data are         
available1 %all pay to ! ,secret>y = !  
fiscal ye> an am\nt t is equal to #e    
p]c5t ( ! total am\nt ow$ on loans by   

borr[]s f ! cov]$ cohort t are 9        
default4  7#c7 ,waiv] & r$uc$ risk-%>+  
paym5ts  7,a7 ,waiv] ,! ,secret>y %all  
waive ! risk-%>+ paym5ts describ$ 9     
p>agraph 7#a7 = an in/itution describ$ 9
 p>agraph 7#b77;,d7 t meets !           
requirem5ts ( ?is p>agraph4  7,b7 ,r$uc$
 risk-%>+ paym5ts ,if an in/itution has 
9 place a /ud5t loan managem5t plan     
describ$ 9 subp>agraph 7,d7 t is approv$
 by ! ,secret>y1 ! ,secret>y %all r$uce 
! total annual am\nt ( risk-%>+ paym5ts 
z foll[s3 7i7 ,) respect to an          
in/itution ) a cohort default rate      
describ$ 9 p>agraph 7#b77;,a71 !        
risk-%>+ paym5t %all be 9 an am\nt t is 
equal to #ae p]c5t ( ! total am\nt ow$  
on loans by borr[]s f ! cov]$ cohort t  
are 9 default4  7ii7 ,) respect to an   
in/itution ) a cohort default rate      
describ$ 9 p>agraph 7#b77;,b71 !        
risk-%>+ paym5t %all be 9 an am\nt t is 
equal to #aj p]c5t ( ! total am\nt ow$  
on loans by borr[]s f ! cov]$ cohort t  
are 9 default4  7iii7 ,) respect to an  

in/itution ) a cohort default rate      
describ$ 9 p>agraph 7#b77;,c71 !        
risk-%>+ paym5t %all be 9 an am\nt t is 
equal to #e p]c5t ( ! total am\nt ow$ on
 loans by borr[]s f ! cov]$ cohort t are
 9 default4  7,c7 ,cont9uation ( waiv]  
or r$uc$ paym5ts ,an in/itution t       
receives a waiv] "u subp>agraph 7,a7 or 
a r$uc$ risk-%>+ paym5t "u subp>agraph  
7,b7 may receive a waiv] or r$uc$ paym5t
 = a subsequ5t fiscal ye> only if !     
,secret>y det]m9es t ! in/itution is    
mak+ satisfactory progress 9 c>ry+ out !
 /ud5t loan managem5t plan describ$ 9   
subp>agraph 7,d71 includ+ evid5ce ( !   
effectiv5ess ( ! individualiz$ f9ancial 
aid c\nsel+ = /ud5ts4  7,d7 ,/ud5t loan 
managem5t plan ,an in/itution t seeks a 
waiv] or r$uction ( its risk-%>+ paym5t1
 %all develop & c>ry out a /ud5t loan   
managem5t plan t %all include an        
analysis ( ! risk factors correlat$ )   
high] /ud5t loan defaults t are pres5t  
at ! in/itution & actions t ! in/itution
 w take to address su* factors4 ,su*    

plan %all include individualiz$ f9ancial
 aid c\nsel+ = /ud5ts & /rategies to    
m9imize /ud5t loan default & del9qu5cy4 
7,e7 ,waiv] or r$uction = c]ta9         
in/itutions ,9 addition to ! o!r        
risk-%>+ paym5t waiv]s & r$uctions      
describ$ 9 ?is p>agraph1 ! ,secret>y may
 waive or r$uce risk-%>+ paym5ts if--   
7i7 an in/itution is eligible "u-- 7,i7 
"p ,a or "p ,b ( title ,,iii2 or  7,,ii7
 title ,v2 &  7ii7 ! ,secret>y det]m9es 
t-- 7,i7 ! in/itution is mak+           
satisfactory progress 9 c>ry+ out !     
in/itution's /ud5t loan managem5t plan  
describ$ "u subp>agraph 7,d72 &  7,,ii7 
grant+ a waiv] or r$uction ( risk-%>+   
paym5ts w\ld be 9 ! be/ f9ancial int]e/ 
( /ud5ts at ! in/itution4  7#d7         
,prohibition ,an in/itution ( high]     
education %all n d5y admission or       
f9ancial aid to a /ud5t :o o!rwise meets
 ! admission requirem5ts ( ! in/itution 
bas$ on su* /ud5t hav+ a risk factor    
associat$ ) high] /ud5t loan default    
rates1 su* z ^? describ$ 9 section      

#def7;c77#a77;,c74  7#e7 ,fund = !      
deposit ( risk-%>+ paym5ts  7,a7 ,9     
g5]al ,!re is e/abli%$ 9 ! ,treasury ( !
 ,unit$ ,/ates a sep>ate acc\nt = !     
deposit ( risk-%>+ paym5ts collect$ "u  
?is subsection = ! purpose ( r$uc+ /ud5t
 loan debt1 del9qu5cy1 & default4 ,!    
,secret>y %all deposit any paym5ts      
collect$ pursuant to ?is subsection into
 su* fund4  7,b7 ,use ( funds ,( !      
am\nts 9 ! fund describ$ 9 subp>agraph  
7,a71 = ea* fiscal ye>-- 7i7 n m ?an #ej
 p]c5t ( su* am\nts %all be made        
available to ! ,secret>y to ent] into   
contracts or coop]ative agreem5ts =     
del9qu5cy & default prev5tion or        
rehabilitation "u section #def7;c72 &   
7ii7 ! ,secret>y %all res]ve ! rema9d] (
 su* am\nts = a ,supplem5tal ,f$]al     
,grant fund t %all be us$ to aw>d grants
 to /ud5ts-- 7,i7 :o are eligible = a   
,f$]al ,pell ,grant2 &  7,,ii7 :o att5d 
an in/itution-- 7aa7 t p>ticipates 9 !  
direct /ud5t loan program "u ?is "p2    
7bb7 9 :i* n less ?an #cc p]c5t ( !     

/ud5ts enroll$ at ! in/itution h receiv$
 a ,f$]al ,pell ,grant2 &  7cc7 t is n  
subject to ! risk-%>+ paym5ts "u ?is    
subsection4  7,c7 ,supplem5tal ,f$]al   
,grant ,eligibility = a ,f$]al ,pell    
,grant1 includ+ ! duration ( eligibility
 & ! am\nt ( a ,f$]al ,pell ,grant1 %all
 n be affect$ by receipt ( a            
,supplem5tal ,f$]al ,grant4  7#f7       
,applicability ,! ,secret>y %all c>ry   
out ?is subsection beg9n+ ) ! cohort    
default rate = ! #bjbd cohort & !       
repaym5t rate = ! #bjbd cohort4 ,! #bjbd
 cohort %all include curr5t & =m] /ud5ts
 :o ent] repaym5t 9 fiscal ye> #bjbd4   
7#g7 ,report to congress ,! ,secret>y   
%all report on an annual basis to !     
,committee on ,heal?1 ,education1       
,labor1 & ,p5sions ( ! ,s5ate & !       
,committee on ,education & ,labor ( !   
,h\se ( ,repres5tatives ! foll[+        
in=mation3 7,a7 ,a li/ ( in/itutions t h
 be5 subject to risk-%>+ paym5ts 9 !    
previ\s ye>4  7,b7 ,! requir$ risk-%>+  
paym5t f su* in/itutions4  7,c7 ,! am\nt

 ( risk-%>+ paym5ts collect$ f su*      
in/itutions4  7,d7 ,a li/ ( !           
in/itutions t h receiv$ waiv]s f !      
risk-%>+ paym5t & ! reason = su* waiv]4 
7,e7 ,a li/ ( ! in/itutions t h receiv$ 
r$uctions 9 ! requir$ risk-%>+ paym5t4  
7,f7 ,! use ( funds deposit$ f risk-%>+ 
paym5ts1 includ+-- 7i7 ! am\nt res]v$ = 
contracts or coop]ative agreem5ts =     
del9qu5cy & default prev5tion or        
rehabilitation2  7ii7 a li/ ( contracts 
or coop]ative agreem5ts ent]$ into =    
del9qu5cy & default prev5tion or        
rehabilitation2  7iii7 in=mation on !   
p]=mance ( su* contracts or coop]ative  
agreem5ts2  7iv7 ! am\nt res]v$ = !     
,f$]al ,pell ,grant program2 &  7v7 a   
li/ ( in/itutions = :i* /ud5ts 9        
att5dance at ! in/itution are eligible =
 ! increas$ maximum ,f$]al ,pell ,grant 
"u p>agraph 7#e77;,b77ii7 & ! am\nt (   
su* increase4  7#h7 ,def9itions ,9 ?is  
subsection3 7,a7 ,cov]$ cohort ,9 ?is   
p>agraph1 ! t]m cov]$ cohort means !    
cohort ) respect to :i* ! cohort default

 rate 0 calculat$4  7,b7 ,repaym5t rate 
,! t]m repaym5t rate means1 = any fiscal
 ye>1 ! p]c5tage ( /ud5t & p>5t borr[]s 
:o h ,f$]al /ud5t loans = att5dance at !
 in/itution :o ent]$ repaym5t on ^?     
loans 9 ! second prec$+ fiscal ye> :o h 
paid at lea/ #a ( ! pr9ciple balance ( !
 borr[]'s ,f$]al /ud5t loans receiv$ =  
att5dance at ! in/itution )9 #c ye>s (  
ent]+ repaym5t4 ,9 ! case ( a loan = a  
/ud5t :o has att5d$ & borr[$ at m ?an "o
 in/itution1 ! borr[] 7& su* borr[]'s   
subsequ5t repaym5t or default7 is       
attribut$ to ea* in/itution = att5dance 
at :i* ! borr[] receiv$ a loan t ent]$  
repaym5t 9 ! fiscal ye>4  4  #d4        
,contracts & coop]ative agreem5ts       
,section #def ( ! ,high] ,education ,act
 ( #aife 7#bj ,u4,s4,c4 #ajhg;f7 is     
am5d$ by add+ at ! end ! foll[+3  7c7   
,contracts & coop]ative agreem5ts =     
del9qu5cy & default prev5tion & =       
default rehabilitation ,! ,secret>y may 
ent] into contracts or coop]ative       
agreem5ts =-- 7#a7 /atewide or          

in/itutionally bas$ programs = !        
prev5tion ( ,f$]al /ud5t loan del9qu5cy 
& default at in/itutions ( high]        
education t-- 7,a7 h a high cohort      
default rate z def9$ "u section #dce7m72
  7,b7 h a l[ repaym5t rate 7z def9$ 9  
section #ded7;d772 or  7,c7 s]ve l>ge   
numb]s or p]c5tages ( /ud5t loan borr[]s
 :o h a risk factor associat$ ) high]   
default rates on ,f$]al /ud5t loans "u  
?is title1 su* z com+ f a l[-income     
family1 be+ a fir/ g5]ation po/second>y 
education /ud5t1 n hav+ a second>y s*ool
 diploma1 or hav+ previ\sly default$ on1
 & rehabilitat$1 a loan made "u ?is     
title2 &  7#b7 increas+ ! numb] (       
borr[]s :o successfully repay _! loans4 
4  #e4 ,f9ancial responsibility ,section
 #dih7;c77#a7 ( ! ,high] ,education ,act
 ( #aife 7#bj ,u4,s4,c4 #ajii;c7c77#a77 
is am5d$ by /rik+ subp>agraph 7,c7 &    
ins]t+ ! foll[+3  7,c7 to meet all ( its
 f9ancial obligations1 includ+          
in/itutional risk-%>+ paym5ts1 refunds (
 in/itutional *>ges1 & repaym5ts to !   

,secret>y = liabilities & debts incurr$ 
9 programs adm9i/]$ by ! ,secret>y4  4  
#f4 ,cohort default rate1 repaym5t rate1
 & o!r am5dm5ts  7a7 ,requirem5ts =     
disbursem5t ( /ud5t loans ,section      
#dbh;,g ( ! ,high] ,education ,act (    
#aife 7#bj ,u4,s4,c4 #ajgh-g7 is am5d$--
 7#a7 9 subsection 7a71 by /rik+        
p>agraph 7#d7 & ins]t+ ! foll[+3  7#d7  
,am5dm5ts to ! special rule  7,a7 ,prior
 to fiscal ye> #bjbd ,beg9n+ on ,octob] 
#a1 #bjaa1 & end+ on ,septemb] #cj1     
#bjbc1 ! special rule "u p>agraph 7#c7  
%all be appli$ by sub/itut+ #ae p]c5t = 
#aj p]c5t4  7,b7 ,beg9n+ = fiscal ye>   
#bjbd ,beg9n+ on ,octob] #a1 #bjbc1 !   
special rule "u p>agraph 7#c7 %all be   
appli$ by sub/itut+ #e p]c5t = #aj      
p]c5t4  2 &  7#b7 9 subsection 7b71 by  
/rik+ p>agraph 7#c7 & ins]t+ ! foll[+3  
7#c7 ,am5dm5t to cohort default rate    
exemption  7,a7 ,prior to fiscal ye>    
#bjbd ,beg9n+ on ,octob] #a1 #bjaa1 &   
end+ on ,septemb] #cj1 #bjbc1 !         
exemption to ! requirem5ts ( p>agraph   

7#a7 9 ! second s5t5ce ( su* p>agraph   
%all be appli$ by sub/itut+ #ae p]c5t = 
#aj p]c5t4  7,b7 ,beg9n+ = fiscal ye>   
#bjbd ,beg9n+ on ,octob] #a1 #bjbc1 !   
exemption to ! requirem5ts ( p>agraph   
7#a7 9 ! second s5t5ce ( su* p>agraph   
%all be appli$ by sub/itut+ #e p]c5t =  
#aj p]c5t4  4  7b7 ,default managem5t   
plan = program p>ticipation agreem5ts   
,section #dhg7;a77#ad77;,c7 ( ! ,high]  
,education ,act ( #aife 7#bj ,u4,s4,c4  
#ajid7;a77#ad77;,c77 is am5d$ by /rik+  
#aj p]c5t & ins]t+ #e p]c5t ea* place ! 
t]m appe>s4  7c7 ,program review & data 
,section #dih;,a7a77#b77;,a7 ( ! ,high] 
,education ,act ( #aife 7#bj ,u4,s4,c4  
#ajii;c-#a7;a77#b77;,a77 is am5d$ by    
/rik+ 9 excess ( #be p]c5t & ins]t+ 9   
excess ( #bj p]c5t4  7d7 ,def9itions =  
/ud5t loan insurance program ,section   
#dce ( ! ,high] ,education ,act ( #aife 
7#bj ,u4,s4,c4 #ajhe7 is am5d$-- 7#a7 9 
subsection 7a77#b77;,b7-- 7,a7 9 clause 
7iii71 by /rik+ & aft] ! semicolon2     
7,b7 9 clause 7iv71 by /rik+ & any      

succe$+ fiscal ye>4 & ins]t+ ?r\gh      
fiscal ye> #bjbc2 &2 &  7,c7 by add+ at 
! end ! foll[+3  7v7 #bj p]c5t = fiscal 
ye> #bjbd & any succe$+ fiscal ye>4  2 &
  7#b7 9 subsection 7m77#a7-- 7,a7 9    
subp>agraph 7,a71 9 ! fir/ s5t5ce1 by   
ins]t+ & beg9n+ = ! cohort t ent]s      
repaym5t 9 #bjbd1 includ+ borr[]s :o    
ent] repaym5t on ,f$]al ,direct ,,plus  
,loans 7includ+ = /ud5t & p>5t borr[]s7 
receiv$ = att5dance at ! in/itution aft]
 loans "u section #dbh1 #dbh;,a1 or     
#dbh;,h1 receiv$ = att5dance at !       
in/itution12 &  7,b7 by add+ at ! end ! 
foll[+3  7,d7 ,beg9n+ = ! cohort t ent]s
 repaym5t 9 #bjbd1 ref]5ces 9 ?is       
subsection to a /ud5t or =m] /ud5t %all 
be consid]$ to include a p>5t :o is a   
borr[] ( a ,f$]al ,direct ,,plus ,loan4 
4