20 U.S.C. § 1087bb: Allocation of funds

100 percent of the amount received under subsections (a) and (b) of this section for fiscal year 1999 (as such subsections were in effect with respect to allocations for such fiscal year), multiplied by the institution’s default penalty, as determined under subsection (e), $5,000; or 100 percent of the amount received and expended under this part for the first year it participated in the program. $5,000; an amount equal to (I) 90 percent of the amount received and used under this part in the second preceding fiscal year by eligible institutions offering comparable programs of instruction, divided by (II) the number of students enrolled at such comparable institutions in such fiscal year, multiplied by (III) the number of students enrolled at the applicant institution in such fiscal year; or 90 percent of the institution’s allocation under this part for the preceding fiscal year. was a first-time participant in the program in fiscal year 2000 or any subsequent fiscal year, and received a larger amount under this subsection in the second year of participation, the amount determined under subparagraph (A), (B), or (C), multiplied by the institution’s default penalty, as determined under subsection (e), If the amount appropriated for any fiscal year is less than the amount required to be allocated to all institutions under paragraph (1) of this subsection, then the amount of the allocation to each such institution shall be ratably reduced. the Secretary shall allot the amount required to be allocated to all institutions under paragraph (1), and the amount of the allocation to each institution under paragraph (2) shall be ratably reduced. If additional amounts are appropriated for any such fiscal year, such reduced amounts shall be increased on the same basis as they were reduced (until the amount allocated equals the amount required to be allocated under paragraphs (1) and (2) of this subsection). From the remainder of the amount appropriated pursuant to section 1087aa(b) 1 of this title after making the allocations required by subsection (a) of this section, the Secretary shall allocate to each eligible institution which has an excess eligible amount an amount which bears the same ratio to such remainder as such excess eligible amount bears to the sum of the excess eligible amounts of all such eligible institutions (having such excess eligible amounts). that institution’s eligible amount (as determined under paragraph (3)), divided by (ii) the sum of the eligible amounts of all institutions (as so determined), multiplied by (iii) the amount appropriated pursuant to section 1087aa(b) 1 of this title for the fiscal year; exceeds the amount required to be allocated to that institution under subsection (a), the amount of the institution’s self-help need, as determined under subsection (c); minus the institution’s anticipated collections; multiplied by the institution’s default penalty, as determined under subsection (e); The amount of an institution’s self-help need is equal to the sum of the self-help need of the institution’s eligible undergraduate students and the self-help need of the institution’s eligible graduate and professional students. establish various income categories for dependent and independent undergraduate students; establish a student aid index for each income category of dependent and independent undergraduate students, determined on the basis of the average student aid index (computed in accordance with part F of this subchapter) of a representative sample within each income category for the second preceding fiscal year; compute 25 percent of the average cost of attendance for all undergraduate students; 25 percent of the average cost of attendance for all undergraduate students determined under subparagraph (C); or the average cost of attendance for all undergraduate students minus the student aid index determined under subparagraph (B) for that income category, except that the amount computed by such subtraction shall not be less than zero; add the amounts determined under subparagraph (D) for each income category of dependent students; 25 percent of the average cost of attendance for all undergraduate students determined under subparagraph (C); or the average cost of attendance for all undergraduate students minus the student aid index determined under subparagraph (B) for that income category, except that the amount computed by such subtraction for any income category shall not be less than zero; add the amounts determined under subparagraph (F) for each income category of independent students; and add the amounts determined under subparagraphs (E) and (G). establish various income categories for graduate and professional students; establish a student aid index for each income category of graduate and professional students, determined on the basis of the average student aid index (computed in accordance with part F of this subchapter) of a representative sample within each income category for the second preceding fiscal year; determine the average cost of attendance for all graduate and professional students; subtract from the average cost of attendance for all graduate and professional students (determined under subparagraph (C)), the student aid index (determined under subparagraph (B)) for each income category, except that the amount computed by such subtraction for any income category shall not be less than zero; multiply the amounts determined under subparagraph (D) by the number of eligible students in each category; add the amounts determined under subparagraph (E) for each income category. For purposes of paragraphs (2) and (3), the term “average cost of attendance” means the average of the attendance costs for undergraduate students and for graduate and professional students, which shall include (i) tuition and fees determined in accordance with subparagraph (B), (ii) standard living expenses determined in accordance with subparagraph (C), and (iii) books and supplies determined in accordance with subparagraph (D). The average undergraduate and graduate and professional tuition and fees described in subparagraph (A)(i) shall be computed on the basis of information reported by the institution to the Secretary, which shall include (i) total revenue received by the institution from undergraduate and graduate tuition and fees for the second year preceding the year for which it is applying for an allocation, and (ii) the institution’s enrollment for such second preceding year. The standard living expense described in subparagraph (A)(ii) is equal to 150 percent of the difference between the income protection allowance for a family of five with one in college and the income protection allowance for a family of six with one in college for a single independent student. The allowance for books and supplies described in subparagraph (A)(iii) is equal to $600. An institution’s anticipated collections are equal to the amount which was collected during the second year preceding the beginning of the award period, multiplied by 1.21. The Secretary shall establish an appeals process by which the anticipated collections required in paragraph (1) may be waived for institutions with low cohort default rates in the program assisted under this part. equals or exceeds 15 percent, shall establish a default reduction plan pursuant to regulations prescribed by the Secretary, except that such plan shall not be required with respect to an institution that has a default rate of less than 20 percent and that has less than 100 students who have loans under this part in such academic year; equals or exceeds 20 percent, but is less than 25 percent, shall have a default penalty of 0.9; equals or exceeds 25 percent, but is less than 30 percent, shall have a default penalty of 0.7; and equals or exceeds 30 percent shall have a default penalty of zero. For fiscal year 2000 and any succeeding fiscal year, any institution with a cohort default rate (as defined under subsection (g)) that equals or exceeds 25 percent shall have a default penalty of zero. the institution demonstrates to the satisfaction of the Secretary that the calculation of the institution’s cohort default rate is not accurate, and that recalculation would reduce the institution’s cohort default rate for any of the 3 fiscal years below 50 percent; or there are, in the judgment of the Secretary, such a small number of borrowers entering repayment that the application of this subparagraph would be inequitable. During an appeal under subparagraph (A), the Secretary may permit the institution to continue to participate in a program under this part. The Secretary shall first be paid an amount which bears the same ratio to such balance (as of the date of such distribution) as the total amount of Federal capital contributions to such fund by the Secretary under this part bears to the sum of such Federal capital contributions and the capital contributions to such fund made by the institution. The remainder of such student loan fund shall be paid to the institution. Any funds returned to the Secretary under this paragraph shall be reallocated to institutions of higher education pursuant to subsection (i). For the purposes of subparagraph (A), the term “loss of eligibility” shall be defined as the mandatory liquidation of an institution’s student loan fund, and assignment of the institution’s outstanding loan portfolio to the Secretary. For award years prior to award year 2000, the applicable maximum cohort default rate is 30 percent. For award year 2000 and subsequent years, the applicable maximum cohort default rate is 25 percent. The term “cohort default rate” means, for any award year in which 30 or more current and former students at the institution enter repayment on loans under this part (received for attendance at the institution), the percentage of those current and former students who enter repayment on such loans (received for attendance at that institution) in that award year who default before the end of the following award year. For any award year in which less than 30 of the institution’s current and former students enter repayment, the term “cohort default rate” means the percentage of such current and former students who entered repayment on such loans in any of the three most recent award years and who default before the end of the award year immediately following the year in which they entered repayment. A loan on which a payment is made by the institution of higher education, its owner, agency, contractor, employee, or any other entity or individual affiliated with such institution, in order to avoid default by the borrower, is considered as in default for the purposes of this subsection. In the case of a student who has attended and borrowed at more than one school, the student (and his or her subsequent repayment or default) is attributed to the school for attendance at which the student received the loan that entered repayment in the award year. voluntarily made 6 consecutive payments; voluntarily made all payments currently due; repaid in full the amount due on the loan; or received a deferment or forbearance, based on a condition that began prior to such time periods; any loan which has, after the time periods specified in paragraph (2), been rehabilitated or canceled; and any other loan that the Secretary determines should be excluded from such determination. The Secretary shall prescribe regulations designed to prevent an institution from evading the application to that institution of a cohort default rate determination under this subsection through the use of such measures as branching, consolidation, change of ownership or control or other means as determined by the Secretary. 240 days (in the case of a loan repayable monthly), or 270 days (in the case of a loan repayable quarterly), The Secretary shall, from time to time, set dates before which institutions must file applications for allocations under this part. If an institution of higher education returns to the Secretary any portion of the sums allocated to such institution under this section for any fiscal year, the Secretary shall reallocate 80 percent of such returned portions to participating institutions in an amount not to exceed such participating institution’s excess eligible amounts as determined under paragraph (2). was a participant in the program assisted under this part in fiscal year 1999; and did not receive an allocation under subsection (a) in the fiscal year for which the reallocation determination is made. that institution’s eligible amount (as determined under subsection (b)(3)), divided by (ii) the sum of the eligible amounts of all participating institutions (as determined under paragraph (3)), multiplied by (iii) the amount of funds available for reallocation under this subsection; exceeds the amount required to be allocated to that institution under subsection (b). The Secretary shall reallocate the remainder of such returned portions in accordance with regulations of the Secretary. If under paragraph (1) of this subsection an institution returns more than 10 percent of its allocation, the institution’s allocation for the next fiscal year shall be reduced by the amount returned. The Secretary may waive this paragraph for a specific institution if the Secretary finds that enforcing it is contrary to the interest of the program.