[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 555 Introduced in House (IH)]






109th CONGRESS
  1st Session
                                H. R. 555

 To establish additional safeguards on schools acting as lenders under 
               the Federal Family Education Loan Program.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 2, 2005

 Mr. Kildee (for himself and Mr. Van Hollen) introduced the following 
    bill; which was referred to the Committee on Education and the 
                               Workforce

_______________________________________________________________________

                                 A BILL


 
 To establish additional safeguards on schools acting as lenders under 
               the Federal Family Education Loan Program.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``School-As-Lender Reform Act of 
2005''.

SEC. 2. SCHOOL-AS-LENDER REFORM.

    Section 435(d)(2) (20 U.S.C. 1085(d)(2)) is amended to read as 
follows:
            ``(2) Requirements for eligible institutions.--
                    ``(A) In general.--To be an eligible lender under 
                this part, an eligible institution--
                            ``(i) shall employ at least one person 
                        whose full-time responsibilities are limited to 
                        the administration of programs of financial aid 
                        for students attending such institution;
                            ``(ii) shall not be a home study school;
                            ``(iii) shall make loans to not more than 
                        50 percent of the undergraduate students at the 
                        institution;
                            ``(iv) shall not make a loan, other than a 
                        loan to a graduate or professional student, 
                        unless the borrower has previously received a 
                        loan from the school;
                            ``(v) shall award any contract for 
                        financing, servicing, administration, or 
                        administration of loans under this title on a 
                        competitive basis;
                            ``(vi) shall offer loans which carry a 
                        reduced origination fee, or a lower interest 
                        rate, or both, than are authorized under the 
                        provisions of this title;
                            ``(vii) shall not have a cohort default 
                        rate (as defined in section 435(m)) greater 
                        than 10 percent;
                            ``(viii) shall use any proceeds from 
                        special allowance payments and interest 
                        payments from borrowers, and any proceeds from 
                        the sale or other disposition of loans, for 
                        need-based grant programs; and
                            ``(ix) shall, for any year for which the 
                        institution engages in activities as an 
                        eligible lender, provide for a compliance audit 
                        conducted in accordance with section 
                        428(b)(1)(U)(iii)(I), and the regulations 
                        thereunder, and submit the results of such 
                        audit to the Secretary.
                    ``(B) Administrative expenses.--An eligible lender 
                under subparagraph (A) shall be permitted to use a 
                portion of the proceeds described in subparagraph 
                (A)(viii) for reasonable and direct administrative 
                expenses.
                    ``(C) Supplement, not supplant.--An eligible lender 
                under subparagraph (A) shall ensure that the proceeds 
                described in subparagraph (A)(viii) are used to 
                supplement, and not to supplant, non-Federal funds that 
                would otherwise be used for need-based grant 
                programs.''.
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