A loan by an eligible lender shall be insurable by the Secretary under the provisions of this subpart only if
(2) evidenced by a note or other written agreement which
(A) 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, an endorsement may be required;
(B) provides for repayment of the principal amount of the loan in installments over a period of not less than 10 years (unless sooner repaid) nor more than 25 years beginning not earlier than 9 months nor later than 12 months after the date of
(i) the date on which
(I) the borrower ceases to be a participant in an accredited internship or residency program of not more than four years in duration;
(II) the borrower completes the fourth year of an accredited internship or residency program of more than four years in duration; or
(III) the borrower, if not a participant in a program described in subclause (I) or (II), ceases to carry, at an eligible institution, the normal full-time academic workload as determined by the institution; or
(ii) the date on which a borrower who is a graduate of an eligible institution ceases to be a participant in a fellowship training program not in excess of two years or a participant in a full-time educational activity not in excess of two years, which
(I) is directly related to the health profession for which the borrower prepared at an eligible institution, as determined by the Secretary; and
(II) may be engaged in by the borrower during such a two-year period which begins within twelve months after the completion of the borrowers participation in a program described in subclause (I) or (II) of clause (i) or prior to the completion of the borrowers participation in such program,
except as provided in subparagraph (C), except that the period of the loan may not exceed 33 years from the date of execution of the note or written agreement evidencing it, and except that the note or other written instrument may contain such provisions relating to repayment in the event of default in the payment of interest or in the payment of the costs of insurance premiums, or other default by the borrower, as may be authorized by regulations of the Secretary in effect at the time the loan is made;
(C) provides that periodic installments of principal and interest need not be paid, but interest shall accrue, during any period
(i) during which the borrower is pursuing a full-time course of study at an eligible institution (or at an institution defined by section
1002 (a) of title
20);
(ii) not in excess of four years during which the borrower is a participant in an accredited internship or residency program (including any period in such a program described in subclause (I) or subclause (II) of subparagraph (B)(i));
(iii) not in excess of three years, during which the borrower is a member of the Armed Forces of the United States;
(iv) not in excess of three years during which the borrower is in service as a volunteer under the Peace Corps Act [
22 U.S.C.
2501 et seq.];
(v) not in excess of three years during which the borrower is a member of the National Health Service Corps;
(vi) not in excess of three years during which the borrower is in service as a full-time volunteer under title I of the Domestic Volunteer Service Act of 1973 [
42 U.S.C.
4951 et seq.];
(vii) not in excess of 3 years, for a borrower who has completed an accredited internship or residency training program in osteopathic general practice, family medicine, general internal medicine, preventive medicine, or general pediatrics and who is practicing primary care;
(viii) not in excess of 1 year, for borrowers who are graduates of schools of chiropractic;
(ix) any period not in excess of two years which is described in subparagraph (B)(ii);
(x) not in excess of three years, during which the borrower is providing health care services to Indians through an Indian health program (as defined in section
1616a (a)(2)(A) of title
25;
and
(xi) in addition to all other deferments for which the borrower is eligible under clauses (i) through (x), any period during which the borrower is a member of the Armed Forces on active duty during the Persian Gulf conflict, and any period described in clauses (i) through (xi) shall not be included in determining the 25-year period described in subparagraph (B);
(D) provides for interest on the unpaid principal balance of the loan at a yearly rate, not exceeding the applicable maximum rate prescribed and defined by the Secretary (within the limits set forth in subsection (b) of this section) on a national, regional, or other appropriate basis, which interest shall be compounded not more frequently than annually and payable in installments over the period of the loan except as provided in subparagraph (C), except that the note or other written agreement may provide that payment of any interest may be deferred until not later than the date upon which repayment of the first installment of principal falls due or the date repayment of principal is required to resume (whichever is applicable) and may further provide that, on such date, the amount of the interest which has so accrued may be added to the principal for the purposes of calculating a repayment schedule;
(E) offers, in accordance with criteria prescribed by regulation by the Secretary, a schedule for repayment of principal and interest under which payment of a portion of the principal and interest otherwise payable at the beginning of the repayment period (as defined in such regulations) is deferred until a later time in the period;
(F) entitles the borrower to accelerate without penalty repayment of the whole or any part of the loan;
(G) provides that the check for the proceeds of the loan shall be made payable jointly to the borrower and the eligible institution in which the borrower is enrolled; and
(H) contains such other terms and conditions consistent with the provisions of this subpart and with the regulations issued by the Secretary pursuant to this subpart, 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 Secretary with respect to such loan; and
(3) subject to the consent of the
student and subject to applicable law, the eligible lender has obtained from the
student appropriate demographic information regarding the
student, including racial or ethnic background.
