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to taxation) in accordance with paragraph (a) of this section. Income described in clause (2) shall be computed in accordance with instructions issued by the Commissioner.
(c) Exclusion of income of parents or spouse in exceptional circumstances. The income of a parent, or parents living together, shall be excluded from consideration under paragraphs (a) or (b) of this section if the borrower is not and, during the 12 months preceding the determination, has not been (1) residing with, (2) claimed as a dependent for Federal income tax purposes by, nor (3) the recipient of an amount in excess of $600 from, such parent or parents. The income of a spouse shall also be excluded from such consideration where there has been a legal separation approved by a court or a separation which has, in fact, existed for 12 months or more.
(d) Method of determination. The determination of the adjusted family income of a student borrower shall be made on the basis of information submitted on forms supplied or approved by the Commissioner. The determination shall be made by the lender each time funds are advanced, except that no new determination need be made with respect to funds advanced (1) within the same tax year in which a determination was last made or (2) on a line of credit extended after May 31, 1967, where a determination has been made during the preceding 12-month period in connection with funds advanced on such line of credit. [32 F.R. 8146, June 7, 1967) Subpart B-Interest Benefits-State
and Private Nonprofit Student Loan Insurance Programs and Direct
State Loan Programs $ 177.11 In general.
Interest benefits as set forth in § 177.15 are available with respect to loans insured under State and private nonprofit student loan insurance programs meeting the requirements of $ 177.12 or $177.13, and with respect to direct State loan programs meeting the requirements of $ 177.14. $ 177.12 Agreements for Federal pay
ments to reduce student interest costs
for insured loans. (a) (1) Except to the extent permitted in $ 177.13, interest benefits shall be
available only if the appropriate State agency or private nonprofit institution or organization has first entered into an agreement with the Commissioner pursuant to paragraph (b) of this section. The Commissioner may enter into such an agreement if he determines that the State or private nonprofit student loan insurance program:
(1) Authorizes the insurance of loans in amounts up to least $1,000, but not exceeding $1,500, to any individual student in any academic year or its equivalent after taking into account other loans covered by this part and 45 CFR Part 178 which the student has received in the same academic year or its equivalent;
(ii) Authorizes the insurance of loans to an individual student for at least 6 academic years of study or their equivalent;
(u) Provides that (a) the student borrower shall be entitled to accelerate without penalty the repayment of the whole or any part of the insured loan, and (b) the insured loan shall be repaid within 15 years from the date of execution of the note or other written evidence of the loan;
(iv) Subject to subdivision (11) of this subparagraph, provides that, where the total of the insured loans to any student which are held by any one person exceeds $2,000, repayment on such loans shall be in installments over period of not less than 5 years nor more than 10 years beginning not earlier than 9 months nor later than 1 year after the student ceases to pursue & full-time course of study at an eligible Institution, except that if the program provides for the insurance of loans for part-time (less than full-time but not less than one-half time) study at eligible institutions, the program shall provide that such repayment period shall begin not earlier than 9 months and not later than 1 year after the student ceases to carry at an eligible institution at least onehalf the normal full-time academic workload as determined by the Institution;
(v) Authorizes interest on the unpaid principal balance of the loan at a yearly rate not in excess of 6 per centum per annum exclusive of any premium for insurance which may be passed on to the
borrower, but such insurance premium become final until the state agency or may not result in charges in excess of nonprofit institution or organization has the equivalent of one-half of 1 per been afforded an opportunity for a hearcentum per annum of the unpaid ing. principal;
(31 F.R. 6109, Apr. 21, 1966, as amended at (vi) Insures not less than 80 per 31 F.R. 14836, Nov. 23, 1966) centum of the unpaid principal of loans insured under the program;
$ 177.13 Interim coverage for insured
loan programs. (vii) Provides that the benefits of the loan insurance program will not be
(a) In lieu of entering into an agreedenied any student because of his family ment described in § 177.12, a State agency income or lack of need if his adjusted or nonprofit institution or organization annual family income at the time the may apply for interim coverage under note is executed is less than $15,000, as which Federal payments may be made determined under $ 177.3;
to reduce student interest costs. In such (viii) Provides that a student may cases Federal payments may be made obtain insurance under the program for only with respect to a student loan for a loan for any year of study at an eligi- which the note was executed and the loan ble institution; and
was insured and advanced between No(ix) In the case of a State loan insur- vember 8, 1965, and June 30, 1967, incluance program, provides that such State sive. The application shall be in such program is administered by a single form as the Commissioner may prescribe, State agency, or by one or more non- and shall be approved only if the Comprofit private institutions or organiza- missioner determines that the student tions under the supervision of a single loan insurance program meets the followState agency. For purposes of this sub- ing conditions: paragraph, “supervision” includes the (1) Interest charges may not exceed responsibility for setting all policies and 6 per centum per annum of the unpaid procedures for the operation of the principal balance of the loan exclusive program.
of any premium for insurance which may (2) The conditions of subparagraph be passed on to the borrower; and (1) (i) of this paragraph will be met if (2) Repayment of such loans shall be the student loan insurance program (i) in installments beginning not earlier than authorizes advances of not more than 60 days after the student borrower ceases $1,500 to a student during any 12-month to be a full-time student in an eligible school period (normally beginning in institution, or, if insurance is available September) or authorizes advances to for part-time study (less than full-time, any student during such 12-month period but not less than half-time) ceases to of not more than an amount which bears carry at an eligible institution at least the same ratio to the number of credit half the normal full-time academic hours for which a full-time or half-time workload as determined by the institustudent borrower is registered during any tion. such 12-month period as $1,500 multi- (b) Such application shall also conplied by the sum of the academic years tain an assurance that the applicant and or their equivalent leading to the degree lenders making loans insured under the or certificate, bears to the total sum of loan insurance program of that State or credit hours required to earn such a private nonprofit institution or organizadegree or certificate; and (ii) authorizes
tion will comply with all regulatoins of advances of at least $1,000 to a full-time this subpart regarding interest payments. student and (if the program includes
The application shall also contain such half-time students) at least $500 to a other provisions as the Commissioner half-time student during any 12-month determines to be necessary for obtaining school period.
information to make payments of in(b) The agreement shall contain such
terest on behalf of students and other. provisions and assurances and be sup
wise to carry out the purposes of this ported by such information as the Commissioner may require pursuant to sec
part. tion 428(b) of the Act, including pro- $ 177.14 Federal payments to reduce vision for termination. Termination will student interest costs on direct State not affect any obligation previously in
loans. curred pursuant to the agreement and, if (a) Federal payments to reduce stuordered by the Commissioner, will not dent interest costs may be made on be
half of students who meet the require- (c) In no event shall payments under ments of $ 177.2 and who have received subparagraphs (1) or (2) of paragraph a loan under a direct student loan pro- (b) of this section include any interest gram of a State which, except to the ex- on interest added to principal or exceed tent otherwise required by State law in the interest payable by the student, after effect prior to the promulgation of this taking into consideration the amount of Regulation, meets the following require- any interest on that loan which the stuments:
dent is entitled to have paid on his be(1) Interest charges may not exceed 6 half for that period under any insured per centum per annum of the unpaid loan program, principal balance of the loan;
(d) The Commissioner's obligation to (2) Repayment of such loans is in in- pay interest shall terminate upon default stallments beginning not earlier than 60 by the borrower, or upon endorsement of days nor later than 1 year after the stu- the note in favor of the guarantee dent borrower ceases to be a full-time agency, whichever occurs first. student in an eligible institution, or if (31 F.R 14836, Nov. 23, 1966) loans are available for part-time study,
& 177.16 Effective dates. ceases to carry at an eligible institution at least one-half the normal full-time Interest payments under this subpart academic workload as determined by the shall be made with respect to a student institution; and
loan only if the note covering such loan (3) The maximum amount of loans to was executed and the loan was advanced any individual student does not exceed
(a) on or after November 8, 1965, under a the maximum amounts provided for in program meeting the requirements of section 425 (a) (1) of the Act.
§ 177.12, § 177.13 or $ 177.14, and ap(b) For purposes of this section, a di- proved by the Commissioner prior to July rect State student loan program includes
1, 1966, or (b) on or after the date specionly those programs which are available
fied by the Commissioner in cases where to students in one or more categories of
such program is approved on or after eligible institutions.
July 1, 1966, and
(1) Not later than June 30, 1967, if the $ 177.15 Amount of interest benefits loan was insured under a student loan and procedures for payment.
program pursuant to § 177.13, or (a) After a loan is made to a student
(2) Not later than June 30, 1968, if the meeting the requirements of § 177.2 (or
loan was made under a student loan inan application is received from such stu
surance program covered by an agreedent for Federal interest payments), a
ment pursuant to $177.12, or under a direport shall be submitted to the Commis
rect State student loan program covered sioner in such form as the Commissioner
by $ 177.14, except that such date is exmay require. On the basis of such re
tended in the case of a loan for which the
note was executed and the advance made port, the Commissioner shall periodically
not later than June 30, 1972, if inquire of the guarantee agency (or State
"(1) Such loan is made to a student loan agency) or of the institution, or of both, as to the enrollment status of the
who had obtained a prior loan on or bestudent borrower. On the basis of such
fore June 30, 1968, with respect to which reports and inquiries, the Commissioner
interest is payable under this subpart, will compute the interest to be paid at
and". the applicable rate to each holder on
(ii) Such loan is made to continue the behalf of each student. Upon certifica
student's educational program. tion of the computation, the Commis
(31 F.R. 6109, Apr. 21, 1961; 31 F.R. 6591, sioner will pay the amount so determined
May 3, 1966) at least every 6 months.
Subpart (-Advances for Reserve (b) The payment shall be limited to:
Funds of State and Private Non(1) The total amount of the interest
profit Loan Insurance Programs on the unpaid principal balance of each loan which accrued prior to the begin- $ 177.21 In general. ning of the repayment period of such
(a) The Commissioner may make adloan; and
vances to any State with which he has. (2) Three percent per year of the un- entered into an agreement pursuant to paid principal balance of any such loan section 428(b) of the Act for the purpose thereafter.
of helping to establish or strengthen the
reserve fund of the student loan insur- § 177.24 Terms and conditions of ad. ance program covered by such agreement.
(b) If for any fiscal year a State does Advances of funds to a guarantee not have a student loan insurance pro
agency shall be upon such terms and gram which is covered by an agreement conditions (including conditions relating pursuant to section 428(b) of the Act,
to the time or times of payment) conand the Commissioner determines, after
sistent with the requirements of section consultation with the chief executive
428(b) as the Commissioner determines officer of that State, that there is no rea- will best carry out the purposes of the sonable likelihood that the State will
Act and shall be repaid at such time of have such a student loan insurance pro
times as may be agreed to by the Comgram for such year, the Commissioner
missioner, in the light of the maturity may make such advances for such year
and solvency of the fund for which the to one or more nonprofit private institu
advance was made, and shall be made tions or organizations with which he has
pursuant to an agreement which shall entered into such an agreement.
include such other terms and conditions (c) The Commissioner may make ad
as are agreed to by the Commissioner vances to a State program (with which
and the guarantee agency, including the he has such an agreement) and to one following: or more nonprofit private institutions or
(a) Funds advanced pursuant to this organizations (with which he has such
subpart shall be used only for the purpose an agreement) in that State if he deter
of insuring loans for the same category of mines that such advances are necessary students on account of which the Federal in order that students in each eligible in- advance was made. Loan insurance stitution have access through such insti
premiums, if any (referred to in § 177.13 tution to a student loan insurance pro
(a) (1) (v)), and interest or other earngram which meets the requirements of
ings derived from such funds may be used section 428(b).
for such purposes and for expenditures $ 177.22 Applications.
necessary for the proper and efficient
administration of the program; Applications for funds made available
(b) The applicant shall submit such pursuant to § 177.21 shall be submitted
financial reports as the Commissioner at such time or times and in such
may reasonably require to enable him to manner and shall contain such informa
carry out his functions under this subtion as the Commissioner may require. part. If, on the basis of such report and § 177.23 Allocation and payment of
such other information as may be approState's allotment.
priate, the Commissioner determines that
any of the funds advanced pursuant to (a) II, in any State, there is no State this subpart are no longer required to student loan insurance program (covered maintain an adequate reserve, he may by an agreement pursuant to section require that such funds be returned to 428(b) of the Act) extending to all stu- the Federal Government or made availadents at eligible institutions who are ble to some other guarantee agency withresidents of that State (regardless of the in the State; and State in which the eligible institution is (c) Such other provision as the Comlocated) the State's allotment, as deter- missioner finds necessary to protect the mined in accordance with the first two interests of the United States and prosentences of section 422(b) of the Act, mote the purposes of the Act. shall be allocated and reallocated from
Subpart D-[Reserved) time to time among all guarantee agencies, covering such residents, on the basis of the most recent information
PART 178—FEDERAL, STATE, AND available to the Commissioner as to the
PRIVATE PROGRAMS OF LOW. coverage of the loan insurance programs INTEREST LOANS AND DIRECT FED. of such agencies.
ERAL LOANS TO VOCATIONAL (b) Payments on account of alloca- STUDENTS tions and reallocations shall be made on the basis of the Commissioner's most re
Subpart A-General Provisions
Sec. cent estimates of the expected demand
178.1 Definitions. for Insured loans and such other infor
178.2 Student eligibility for Interest benemation as the Commissioner may deem
178.3 Adjusted family incomo.
Subpart Bem Interest Benefits State and Private vides within that State, a program of
Nonprofit Student Loan Insurance Programs and postsecondary vocational or technical Direct State Loan Programs
education designed to fit individuals for Sec.
useful employment in recognized occu178.11 In general.
pations; (3) has been in existence for I 178.12 Agreements for Federal payments to 2 years or has been specially accredited
reduce student interest costs for by the Commissioner as an institution insured loans.
meeting the other requirements of this • 178.13 Interim coverage for insured loan
paragraph; and (4) is accredited (1) by programs.
nationally recognized accrediting 178.14 Federal payments to reduce student interest costs on direct State loans.
agency or association listed by the Com178.15 Amount of interest benefits and pro
missioner pursuant to this paragraph, cedures for payment.
(ii) if the Commissioner determines 178.16 Effective dates.
there is no nationally recognized acSubpart (-Advances for Reserve Funds of State crediting agency or association qualified
and Private Nonprofit Loan Insurance Programs to accredit schools of a particular cate: 178.21 In general.
gory, by a State agency listed by the 178.22 Applications.
Commissioner pursuant to this ra178.23 Allocation and payment of State's graph, and (iii) if the Commissioner deallotment.
termines there is no nationally recog178.24 Terms and conditions of advances.
nized or State agency or association AUTHORITY: The provisions of this Part 178 qualified to accredit schools of a particuunder secs. 2–17, 79 Stat. 1037-1049; 20 U.S.C. lar category, by an advisory committee 981-996.
appointed by him and composed of perSOURCE: The provisions of this Part 178 sons specially qualified to evaluate trainappear at 31 F.R. 14942, Nov. 26, 1966, unless ing provided by schools of that category, otherwise noted.
which committee shall prescribe the Subpart A-General Provisions
standards of content, scope and quality
which must be met by those schools in $ 178.1 Definitions.
order for loans to students attending
them to be insurable under the Act, and As used in this part:
shall also determine whether particular (a) "Act" means the National Voca
schools meet those standards. For the tional Student Loan Insurance Act of
purpose of this paragraph, the Com1965 (P.L. 89–287, 79 Stat. 1037-1049, 20
missioner shall publish a list of nationU.S.C. 981–996).
ally recognized accrediting agencies or (b) "Internal Revenue Code" means
associations and State agencies which he the Internal Revenue Code of 1954 as
determines to be reliable authority as amended (Title 26, United States Code).
to the quality of education or training (c) “Academic year or its equivalent" afforded. means the period of time in which a full
(f) “Program of postsecondary vocatime student would normally be expected tional or technical education" means & to complete 28 semester hours, 42 quarter program of vocational or technical eduhours or 900 clock hours of instruction, cation designed to provide occupational or its equivalent. For purposes of this skills more advanced than those genpart, 18 months is considered the equiva- erally provided at the high school level lent of an academic year when applied to
and which provides not less than 300 a program offered by correspondence. clock hours of classroom instruction or
(d) “Commissioner" means the U.S. Its equivalent, or in the case of a program Commissioner of Education or his offered by correspondence, requiring nordesignee.
mal completion In not less than 6 months. (e) “Eligible institution" or "Institu- (g) "Eligible lender" means an eligi. tion" means a business or trade school, ble institution as defined in paragraph or technical Institution or other techni- (e) of this section, or an agency or incal or vocational school in any State strumentality of a State, or a financial which (1) admits as regular students or credit Institution (including banks, only persons who have completed or left credit unions, savings and loan associaelementary or secondary school and who tions and insurance companies) which is have the ability to benefit from the train- subject to examination and supervision Ing offered by such Institution; (2) is by an agency of the United States or of legally authorized to provide, and pro- any State.