(a) General authority The Secretary shall enter into agreements pursuant to section
1087d (a) of this title with institutions of higher education to participate in the direct
student loan program under this part, and agreements pursuant to section
1087d (b) of this title with institutions of higher education, or consortia thereof, to originate loans in such program, for academic years beginning on or after July 1, 1994. Alternative origination services, through which an entity other than the participating institution at which the
student is in attendance originates the loan, shall be provided by the Secretary, through 1 or more contracts under section
1087f (b) of this title or such other means as the Secretary may provide, for students attending participating institutions that do not originate direct
student loans under this part. Such agreements for the academic year 19941995 shall, to the extent feasible, be entered into not later than January 1, 1994.
(b) Selection criteria
(1) Application Each institution of higher education desiring to participate in the direct
student loan program under this part shall submit an application satisfactory to the Secretary containing such information and assurances as the Secretary may require.
(2) Selection procedure The Secretary shall select institutions for participation in the direct
student loan program under this part, and shall enter into agreements with such institutions under section
1087d (a) of this title, from among those institutions that submit the applications described in paragraph (1), and meet such other eligibility requirements as the Secretary shall prescribe.
(c) Selection criteria for origination
(1) In general The Secretary may enter into a supplemental agreement with an institution (or a consortium of such institutions) that
(A) has an agreement under subsection 1087d(a) of this title;
(B) desires to originate loans under this part; and
(C) meets the criteria described in paragraph (2).
(2) Selection criteria The Secretary may approve an institution to originate loans only if such institution
(A) is not on the reimbursement system of payment for any of the programs under subpart 1 or 3 of part A of this subchapter, part C of subchapter I of chapter
34 of title
42, or part D of this subchapter;
(B) is not overdue on program or financial reports or audits required under this subchapter;
(C) is not subject to an emergency action, or a limitation, suspension, or termination under section
1078 (b)(1)(T),
1082 (h), or
1094 (c) of this title;
(D) in the opinion of the Secretary, has not had severe performance deficiencies for any of the programs under this subchapter, including such deficiencies demonstrated by audits or program reviews submitted or conducted during the 5 calendar years immediately preceding the date of application;
(E) provides an assurance that such institution has no delinquent outstanding debts to the Federal Government, unless such debts are being repaid under or in accordance with a repayment arrangement satisfactory to the Federal Government, or the Secretary in the Secretarys discretion determines that the existence or amount of such debts has not been finally determined by the cognizant Federal agency; and
(F) meets such other criteria as the Secretary may establish to protect the financial interest of the United States and to promote the purposes of this part.
(3) Regulations governing approval The Secretary shall promulgate and publish in the Federal Register regulations governing the approval of institutions to originate loans under this part in accordance with section
1087g (a)(2) of this title.
(e) Consortia Subject to such requirements as the Secretary may prescribe, eligible institutions of higher education (as determined under subsection (d) of this section) with agreements under section
1087d (a) of this title may apply to the Secretary as consortia to originate loans under this part for students in attendance at such institutions. Each such institution shall be required to meet the requirements of subsection (c) of this section with respect to loan origination.
