(a) In general Amounts in the Trust shall be available
(1) to repay
student loans in accordance with subsection (b) of this section;
(2) to pay all or part of the cost of attendance at an institution of higher education in accordance with subsection (c) of this section;
(3) to pay expenses incurred in participating in an approved
school-to-work program in accordance with subsection (d) of this section; and
(4) to pay interest expenses in accordance with regulations prescribed pursuant to subsection (e) of this section.
(b) Use of educational award to repay outstanding student loans
(1) Application by eligible individuals An eligible individual under section
12602 of this title who desires to apply the national service educational award of the individual to the repayment of qualified
student loans shall submit, in a manner prescribed by the Corporation, an application to the Corporation that
(A) identifies, or permits the Corporation to identify readily, the holder or holders of such loans;
(B) indicates, or permits the Corporation to determine readily, the amounts of principal and interest outstanding on the loans;
(C) specifies, if the outstanding balance is greater than the amount disbursed under paragraph (2), which of the loans the individual prefers to be paid by the Corporation; and
(D) contains or is accompanied by such other information as the Corporation may require.
(2) Disbursement of repayments
Upon receipt of an application from an eligible individual of an application that complies with paragraph (1), the Corporation shall, as promptly as practicable consistent with paragraph (5), disburse the amount of the national service educational award that the eligible individual has earned. Such disbursement shall be made by check or other means that is payable to the holder of the loan and requires the endorsement or other certification by the eligible individual.
(3) Application of disbursed amounts If the amount disbursed under paragraph (2) is less than the principal and accrued interest on any qualified
student loan, such amount shall be applied according to the specified priorities of the individual.
(4) Reports by holders
Any holder receiving a loan payment pursuant to this subsection shall submit to the Corporation such information as the Corporation may require to verify that such payment was applied in accordance with this subsection and any regulations prescribed to carry out this subsection.
(5) Notification of individual
The Corporation upon disbursing the national service educational award, shall notify the individual of the amount paid for each outstanding loan and the date of payment.
(6) Authority to aggregate payments
The Corporation may, by regulation, provide for the aggregation of payments to holders under this subsection.
(7) “Qualified student loans” defined As used in this subsection, the term qualified
student loans means
(A) any loan made, insured, or guaranteed pursuant to title IV of the Higher Education Act of 1965 (
20 U.S.C.
1070 et seq. [and
42 U.S.C.
2751 et seq.]), other than a loan to a parent of a
student pursuant to section 428B of such Act (
20 U.S.C.
1078–2); and
(B) any loan made pursuant to title VII or VIII of the Public Health Service Act [
42 U.S.C.
292 et seq.,
296 et seq.].
(8) “Holder” defined
As used in this subsection, the term holder with respect to any eligible loan means the original lender or, if the loan is subsequently sold, transferred, or assigned to some other person, and such other person acquires a legally enforceable right to receive payments from the borrower, such other person.
(c) Use of educational awards to pay current educational expenses
(1) Application by eligible individual An eligible individual under section
12602 of this title who desires to apply the individuals national service educational award to the payment of current full-time or part-time educational expenses shall, on a form prescribed by the Corporation, submit an application to the institution of higher education in which the
student will be enrolled that contains such information as the Corporation may require to verify the individuals eligibility.
(2) Submission of requests for payment by institutions An institution of higher education that receives one or more applications that comply with paragraph (1) shall submit to the Corporation a statement, in a manner prescribed by the Corporation, that
(A) identifies each eligible individual filing an application under paragraph (1) for a disbursement of the individuals national service educational award under this subsection;
(B) specifies the amounts for which such eligible individuals are, consistent with paragraph (6), qualified for disbursement under this subsection;
(C) certifies that
(i) the institution of higher education has in effect a program participation agreement under section 487 of the Higher Education Act of 1965 (
20 U.S.C.
1094);
(ii) the institutions eligibility to participate in any of the programs under title IV of such Act (
20 U.S.C.
1070 et seq. [and
42 U.S.C.
2751 et seq.]) has not been limited, suspended, or terminated; and
(iii) individuals using national service educational awards received under this division to pay for educational costs do not comprise more than 15 percent of the total
student population of the institution; and
(D) contains such provisions concerning financial compliance as the Corporation may require.
(3) Disbursement of payments
Upon receipt of a statement from an institution of higher education that complies with paragraph (2), the Corporation shall, subject to paragraph (4), disburse the total amount of the national service educational awards for which eligible individuals who have submitted applications to that institution under paragraph (1) are scheduled to receive. Such disbursement shall be made by check or other means that is payable to the institution and requires the endorsement or other certification by the eligible individual.
(4) Multiple disbursements required
The total amount required to be disbursed to an institution of higher education under paragraph (3) for any period of enrollment shall be disbursed by the Corporation in 2 or more installments, none of which exceeds 1/2 of such total amount. The interval between the first and second such installment shall not be less than 1/2 of such period of enrollment, except as necessary to permit the second installment to be paid at the beginning of the second semester, quarter, or similar division of such period of enrollment.
(5) Refund rules The Corporation shall, by regulation, provide for the refund to the Corporation (and the crediting to the national service educational award of an eligible individual) of amounts disbursed to institutions for the benefit of eligible individuals who withdraw or otherwise fail to complete the period of enrollment for which the assistance was provided. Such regulations shall be consistent with the fair and equitable refund policies required of institutions pursuant to section 484B of the Higher Education Act of 1965 (
20 U.S.C.
1091b). Amounts refunded to the Trust pursuant to this paragraph may be used by the Corporation to fund additional approved national service positions under division C of this subchapter.
(6) Maximum award The portion of an eligible individuals total available national service educational award that may be disbursed under this subsection for any period of enrollment shall not exceed the difference between
(A) the eligible individuals cost of attendance for such period of enrollment, determined in accordance with section 472 of the Higher Education Act of 1965 (
20 U.S.C.
1087ll); and
(B) the sum of
(i) the students estimated financial assistance for such period under part A of title IV of such Act (
20 U.S.C.
1070 et seq.); and
(ii) the students veterans education benefits, determined in accordance with section 480(c) of such Act (
20 U.S.C.
1087vv (c)).
(e) Interest payments during forbearance on loan repayment The Corporation shall provide by regulation for the payment on behalf of an eligible individual of interest that accrues during a period for which such individual has obtained forbearance in the repayment of a qualified
student loan (as defined in subsection (b)(6)1 of this section), if the eligible individual successfully completes the individuals required term of service (as determined under section
12602 (b) of this title). Such regulations shall be prescribed after consultation with the Secretary of Education.
(f) Exception With the approval of the Director, an approved national service program funded under section
12571 of this title, may offer participants the option of waiving their right to receive a national service educational award in order to receive an alternative post-service benefit funded by the program entirely with non-Federal funds.
