“ELIGIBILITY OF STUDENT BORROWERS AND TERMS OF STUDENT LOANS

"SEC. 214. A loan by an eligible lender shall be insurable under the provisions of this part only if—

"(a) made to a student who has been accepted for enrollment as a full-time student at such institution or, in the case of a student already attending such institution, is in good standing and in full-time attendance there as an undergraduate, graduate, or professional student, as determined by the institution, and

"(b) evidenced by a note or other written agreement which (1) is made without security and without endorsement, except that if the borrower is a minor and such note or other written agreement executed by him would not, under the applicable law, create a binding obligation, endorsement may be required, (2) provides for repayment of the principal amount of such loan in installments over a ten-year period (or such other period as may be authorized by regulation of the Commissioner) beginning (except in the event of default in the payment of interest or in payment of the cost of insurance premiums, or other default by the borrower) (A) not earlier than one year following the date on which the student ceases to devote essentially full time to educational work in attendance at any institution of higher education, or (B) if sooner, and if agreed upon between the borrower and the lender, not earlier than one year following the date on which the student completes or ceases to pursue the full-time study program in which he was enrolled (or had been accepted for enrollment) for which he would, upon satisfactory completion, be entitled to receive an academic degree or similar certificate, (3) provides for interest on the unpaid balance of such loan at a yearly rate, not exceeding the applicable maximum rate as prescribed and defined by the Commissioner by or pursuant to regulation, which shall be payable in installments over the period of the loan except that, if provided in the note or other writes an agreement, payment of interest may be deferred until not later than the date upon which repayment of the first installment of principal falls due, in which case interest that has accrued during such period may be added on that date to the principal, (4) entitles the student borrower to accelerate repayment of the whole or any part of such loan, and (5) contains such other terms and conditions, consistent with the provisions of this part and with the regulations issued by the Commissioner pursuant to this part, as may be agreed upon by the parties to such loan, including, if agreed upon, a provision requiring the borrower to pay to the lender, in addition to principal and interest, amounts equal to the insurance premiums payable by the lender to the Commissioner with respect to such loan.

"CERTIFICATES OF INSURANCE-EFFECTIVE DATE OF INSURANCE-PREMIUMS

"SEC. 215. (a) If, upon application by an eligible lender, made upon such form, containing such information, and supported by such evidence as the Commissioner may require, and otherwise in conformity with this section, the Commissioner finds that the applicant has made a loan to an eligible student which is insurable under the provisions of this part, he may, upon tender by the applicant of the first year's insurance premium payable pursuant to subsection (d), issue to such applicant a certificate of insurance covering such loan and setting forth the amount and terms of such insurance.

"(b) Insurance evidenced by a certificate of insurance pursuant to subsection (a) shall become effective upon the date of issuance of such certificate, except that the Commissioner is authorized, in accordance with regulations, to issue commitments with respect to proposed loans, or with respect to lines (or proposed lines) of credit (as defined in section 212), submitted by eligible lenders, and in that event, upon compliance with subsection (a) by the lender, the certificate of insurance may be issued effective as of the date when any loan, or any payment by the lender pursuant to a line of credit, to be covered by such insurance was made. Such insurance shall cease to be effective upon thirty days' default by the lender in the payment of any installment of the premiums payable pursuant to subsection (d).

"(c) An application submitted pursuant to subsection (a) shall contain (1) an agreement by the applicant to pay, in accordance with regulations, the premiums fixed by the Commissioner pursuant to subsection (d), and (2) an agreement by the applicant that if the loan is covered by insurance the applicant will submit such supplementary reports and statements during the effective

period of the loan agreement, upon such forms, at such times, and containing such information as the Commissioner may prescribe by or pursuant to regulation. "(d) The Commissioner shall, pursuant to regulations, charge for insurance on each loan under this part a premium in an amount not to exceed one-fourth of 1 per centum per year of the unpaid balance of principal and accrued interest of such loan, payable in advance, at such time and in such manner as may be prescribed by the Commissioner. Such regulations may provide that such premium shall not be payable, or if paid shall be refundable, with respect to any period after default in the payment of principal or interest, or after the borrower has died or becomes totally and permanently disabled, if (1) notice of such default or other event has been duly given, and (2) request for payment of the loss insured against has been made or the Commissioner has made such payment on his own motion pursuant to section 216(a).

"(e) The rights of an eligible lender arising under insurance evidenced by a certificate of insurance issued to it under this section may be assigned as security by such lender only to another eligible lender, and subject to regulation by the Commissioner.

"(f) The consolidation of the obligations of two or more insured loans obtained by a student borrower in any fiscal year into a single obligation evidenced by a single instrument of indebtedness shall not affect the insurance by the United States. Upon surrender of the original certificates of insurance in such cases, the Commissioner may issue a new certificate of insurance in accordance with this section upon such consolidated obligation.

"PROCEDURE ON DEFAULT, DEATH, OR DISABILITY OF STUDENT

"SEC. 216. (a) Upon default by the student borrower on any loan covered by insurance pursuant to this part, or upon the death of the student borrower or a finding by the insurance beneficiary that the borrower has become totally and permanently disabled (as determined in accordance with regulations established by the Commissioner) before the loan has been repaid in full, and prior to the commencement of suit or other enforcement proceeding upon any security for such loan, the insurance beneficiary shall promptly notify the Commissioner, and the Commissioner shall, if requested (at that time or after further collection efforts) by such beneficiary, or may on his own motion, if the insurance is still in effect, pay to the beneficiary, within the limits of liability specified in section 212 (b), the amount of the loss sustained by the insured upon such loan as soon as such amount has been determined. The amount of the loss' on any loan shall, for the purposes of this subsection, be deemed to be an amount equal to the unpaid balance of the loan, including interest accrued and unpaid on the date of payment by the United States on its insurance obligation, except that where the Commissioner has decided to make payment on his own motion the amount of the loss as so determined shall be deemed tentative and shall be increased by the excess, if any, over such tentative amount of any net recovery made by the Commissioner on such loan after deduction of the cost of such recovery (including reasonable administrative cost).

"(b) Upon payment by the Commissioner of the insured portion of the loss, or tentative amount of loss, pursuant to subsection (a), the United States shall be subrogated to the rights of the holder of the obligation upon the insured loan and be entitled to an assignment of the note or other evidence of the insured loan by the insurance beneficiary.

"(c) Nothing in this section or in this part shall be construed to preclude any forbearance for the benefit of the student borrower which may be agreed upon by the parties to the insured loan and approved by the Commissioner, or to preclude forbearance by the Commissioner in the enforcement of the insured obligation after payment on such insurance, or to require collection of the amount of any loan by the insurance beneficiary or by the Commissioner from the estate of a deceased borrower or from a borrower found by the insurance beneficiary to have become permanently and totally disabled.

"(d) Nothing in this section or in this part shall be construed to excuse the holder of a loan from exercising, in the making and collection of loans under the provisions of this part, the same care and diligence which would reasonably be used in making and collecting loans not insured. If the Commissioner, after reasonable notice and opportunity for hearing to an eligible lender, finds that it has substantially failed to exercise such care and diligence, or to make the reports and statements required under section 215(c), or to pay the required in

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surance premiums, he shall disqualify such lender for further insurance on loans granted pursuant to this part until he is satisfied that such failure has ceased and finds that there is reasonable assurance that the lender will in the future exercise necessary care and diligence or comply with such requirements, as the case may be.

"(e) As used in this section, the term 'insurance beneficiary' means the insured or its authorized assignee, if the certificate of insurance is held by such assignee.

"REVOLVING INSURANCE FUND

"SEC. 217. (a) There is hereby established a Student Loan Insurance Fund (hereafter in this section called the 'Fund') which shall be available without fiscal year limitation to the Commissioner for carrying out the provisions of this part, and the Commissioner is hereby authorized to transfer to the Fund from time to time from the appropriations provided under subsection (b) of this section such sums as he deems necessary to provide capital for the Fund. All amounts received by the Commissioner as premium charges for insurance and as receipts, earnings, or proceeds derived from any claim or other assets acquired by the Commissioner in connection with his operations under this part, and any other moneys, property, or assets derived by the Commissioner from his operations in connection with this section, shall be deposited in the Fund. All expenses under this part shall be paid from the Fund, including (within the limits authorized from year to year in appropriation Acts to be paid for such purpose from the Fund) all administrative expenses which the Commissioner determines are reasonably attributable to his operations under this part. Moneys in the Fund not needed for current operations under this section may be invested in bonds or other obligations guaranteed as to principal and interest by the United States. If at any time the Commissioner determines that capital surplus and reserves of the Fund exceed the present and any reasonably prospective future requirements of the Fund, such excess may be deposited in the Treasury as miscellaneous receipts.

"(b) (1) For the purpose of carrying out the provisions of this part, there are authorized to be appropriated for transfer to the Fund, pursuant to subsection (a) of this section

"(A) the sum of $500,000; and

"(B) such further sums, if any, as may become necessary for the adequacy of the Fund. Any sums appropriated under this subsection shall remain available until expended.

"(2) Interest shall accrue to the Treasury on outstanding capital resulting from transfers to the Fund from appropriations under paragraph (1) of this subsection. The rate of such interest with respect to each such transfer shall be determined by the Secretary of the Treasury, taking into consideration the current average market yield, during the month preceding such transfer, on outstanding marketable obligations of the United States having maturities comparable to those of loans insured under this part. From time to time and at least at the close of each fiscal year, the Commissioner shall pay to the Treasury, as miscellaneous receipts, all accrued interest.

"(3) If at any time the moneys in the Fund (including any appropriation available for transfer to the Fund pursuant to this section) are insufficient to make payments in connection with the default of any loan insured under this part, the Commissioner is authorized to issue to the Secretary of the Treasury notes or other obligations in such forms and denominations, bearing such maturities, and subject to such terms and conditions as may be prescribed by the Commissioner with the approval of the Secretary of the Treasury. Such notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States of comparable maturities during the month preceding the issuance of such notes or other obligations. The Secretary of the Treasury is authorized and directed to purchase any notes and other obligations issued hereunder and for such purpose he is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under the Second Liberty Bond Act, as amended, and the purposes for which securities may be issued under such Act, as amended, are

extended to include any purchases of such notes and obligations. The Secretary of the Treasury may at any time sell any of the notes or other obligations acquired by him under this paragraph. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes or other obligations shall be treated as public debt transactions of the United States. Sums borrowed under this paragraph shall be deposited in the Fund and redemption of such notes and obligations shall be made by the Commissioner from such Fund.

"LEGAL POWERS AND RESPONSIBILITIES

"SEC. 218. (a) In the performance of, and with respect to, the functions, powers, and duties vested in him by this part, the Commissioner may

"(1) prescribe such regulations as may be necessary to carry out the purposes of this part;

"(2) sue and be sued in any court of record of a State having general jurisdiction or in any district court of the United States, and such district courts shall have jurisdiction of civil actions arising under this part without regard to the amount in controversy, and any action instituted under this subsection by or against the Commissioner shall survive notwithstanding any change in the person occupying the office of Commissioner or any vacancy in such office; but no attachment, injunction, garnishment, or other similar process, mesne or final shall be issued aaginst the Commissioner or property under his control, and nothing herein shall be construed to except litigation arising out of activities under this part from the application of sections 507(b) and 2679 of title 28 of the United States Code and of section 367 of the Revised Statutes (5 U.S.C. 316);

“(3) include in any contract for insurance such terms, conditions, and covenants relating to repayment of principal and payment of interest, relating to his obligations and rights and to those of eligible lenders, and borrowers in case of default, and relating to other matters as the Commissioner determines to be necessary to assure that the purposes of this part will be achieved; and any term, condition, and covenant made pursuant to this clause or any other provision of this part may be modified by the Commissioner if he determines such modification is necessary to protect the financial interest of the United States;

"(4) subject to the specific limitations in this part, consent to the modification, with respect to rate of interest, time of payment of any installment of principal and interest or any portion thereof, or any other provision of any note or other instrument evidencing a loan which has been insured under this part;

"(5) enforce, pay, or compromise, any claim on, or arising because of, any such insurance; and

"(6) enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.

"(b) The Commissioner shall, with respect to the financial operations arising by reason of this part

"(1) prepare annually and submit a budget program as provided for wholly owned Government corporations by the Government Corporation Control Act;

"(2) maintain an integral set of accounts, which shall be audited annually by the General Accounting Office in accordance with principles and procedures applicable to commercial corporate transactions, as provided by section 105 of the Government Corporation Control Act with respect to insurance under this part, except that the transactions of the Commissioner, including the settlement of insurance claims, and transactions related thereto and vouchers approved by the Commissioner in connection with such transactions, shall be final and conclusive upon all accounting and other officers of the Government."

PART C-STUDENT WORK-STUDY PROGRAMS

SEC. 141. (a) Title II of the National Defense Education Act of 1958, as amended, is further amended by inserting immediately following part B (as added by section 121 of this Act) the following new part:

"PART C-WORK ASSISTANCE FOR STUDENTS IN INSTITUTIONS OF HIGHER

EDUCATION

"APPROPRIATIONS AUTHORIZED

"SEC. 221. For the purpose of enabling the Commissioner to stimulate and promote the part-time employment, by institutions of higher education, of their students who are in need of the earnings from such employment to pursue courses of study at such institutions, there are authorized to be appropriated $22,500,000 for the fiscal year ending June 30, 1964, and such sums as the Congress may determine for each of the next two fiscal years. Sums appropriated under this section for any fiscal year shall be available, in accordance with agreements between the Commissioner and institutions of higher education, for payment by the Commissioner of one-half of the compensation of students employed under work-study programs covered by such agreements for such fiscal year.

"APPORTIONMENT OF FUNDS

"SEC. 222. For the purpose of determining the maximum amount that may be paid by the Commissioner under this part as compensation to students at each participating institution of higher education, the Commissioner shall apportion the amount appropriated pursuant to section 221 for any fiscal year as follows: "(a) The Commissioner shall allot to each State an amount which bears the same ratio to the amount so appropriated as the number of persons enrolled on a full-time basis in institutions of higher education in such State bears to the total number of persons enrolled on a full-time basis in institutions of higher education. in all of the States. The number of persons enrolled on a full-time basis in institutions of higher education for the purposes of this section shall be determined by the Commissioner for the most recent year for which satisfactory data are available to him.

"(b) In order to allocate the amount so allotted to any State among institutions of higher education in such State with which he has agreements under thispart and which meet the requirements established in his regulations under this part, the Commissioner shall from time to time set dates by which such institutions must file application for such allocations. In the event that the total requested in such applications from such institutions in a State exceeds the amount of the allotment of such State available for such purpose, the allocation from such allotment to each such institution shall bear the same ratio to the amount requested in its application as the amount of such allotment available for such purpose bears to the total requested in all such applications. In the event the total requested in such applications from such institutions in a State is less than the amount of the allotment of such State available for such purpose, the Commissioner may reallot the remaining amount from time to time, on such date or dates as the Commissioner may fix, to other States in proportion to the original allotments to such States under subsection (a) for such year, and may allocate such reallotted amounts among participating institutions in such other States.

"CONDITIONS OF AGREEMENTS

"SEC. 223. An agreement with any institution of higher education under this part shall

"(1) provide for the operation by the institution of a program for the part-time employment of its students in work of an educational character or having a substantial educational content;

"(2) provide that employment under such work-study program shall be furnished only to a student who (A) is in need of the earnings from employment to pursue a course of study at such institution, (B) is capable, in the opinion of the institution, of maintaining good standing in such course of study while employed under the program covered by the agreement, and (C) has been accepted for enrollment as a full-time student at the institution, or in the case of a student already enrolled in and attending the