42 USC 292g - Risk-based premiums

U.S Code last checked for updates: May 16, 2024

§ 292g.

Risk-based premiums

(a)

Authority

(b)

Assessment of premium

Except as provided in subsection (d)(2), the risk-based premium to be assessed under subsection (a) shall be as follows:

(1)

Low-risk rate

(2)

Medium-risk rate

(A)

In general

With respect to an eligible borrower seeking to obtain a loan for attendance at an eligible institution that has a default rate of in excess of five percent but not to exceed 10 percent—

(i)

such borrower shall be assessed a risk-based premium in an amount equal to 8 percent of the principal amount of the loan; and

(ii)

such institution shall be assessed a risk-based premium in an amount equal to 5 percent of the principal amount of the loan.

(B)

Default management plan

(3)

High-risk rate

(A)

In general

With respect to an eligible borrower seeking to obtain a loan for attendance at an eligible institution that has a default rate of in excess of 10 percent but not to exceed 20 percent—

(i)

such borrower shall be assessed a risk-based premium in an amount equal to 8 percent of the principal amount of the loan; and

(ii)

such institution shall be assessed a risk-based premium in an amount equal to 10 percent of the principal amount of the loan.

(B)

Default management plan

(4)

Ineligibility

(c)

Reduction of risk-based premium

(d)

Administrative waivers

(1)

Hearing

(2)

Exceptions

(3)

Transition for certain institutions

During the 3-year period beginning on October 13, 1992—

(A)

subsection (b)(4) shall not apply with respect to any eligible institution that is a Historically Black College or University; and

(B)

any such institution that has a default rate in excess of 20 percent, and any eligible borrower seeking a loan for attendance at the institution, shall be subject to subsection (b)(3) to the same extent and in the same manner as eligible institutions and borrowers described in such subsection.

(e)

Payoff to reduce risk category

(July 1, 1944, ch. 373, title VII, § 708, as added Pub. L. 102–408, title I, § 102, Oct. 13, 1992, 106 Stat. 2004.)

cite as: 42 USC 292g