20 USC 1078-7 - Requirements for disbursement of student loans

U.S Code last checked for updates: Nov 22, 2024

§ 1078–7.

Requirements for disbursement of student loans

(a)

Multiple disbursement required

(1)

Two disbursements required

(2)

Minimum interval required

(3)

Special rule

(4)

Amendment to special rule

(b)

Disbursement and endorsement requirements

(1)

First year students

(2)

Other students

(3)

Amendment to cohort default rate exemption

(c)

Method of multiple disbursement

Disbursements under subsection (a)—

(1)

shall be made in accordance with a schedule provided by the institution (under section 1078(a)(2)(A)(i)(II) of this title) that complies with the requirements of this section;

(2)

may be made directly by the lender or, in the case of a loan under sections 1078 and 1078–1 1

 See References in Text note below.

of this title, may be disbursed pursuant to the escrow provisions of section 1078(i) of this title; and

(3)

notwithstanding subsection (a)(2), may, with the permission of the borrower, be disbursed by the lender on a weekly or monthly basis, provided that the proceeds of the loan are disbursed by the lender in substantially equal weekly or monthly installments, as the case may be, over the period of enrollment for which the loan is made.

(d)

Withholding of second disbursement

(1)

Withdrawing students

(2)

Students receiving over-awards

(e)

Exclusion of consolidation and foreign study loans

(f)

Beginning of period of enrollment

(g)

Sales prior to disbursement prohibited

An eligible lender shall not sell or transfer a promissory note for any loan made, insured, or guaranteed under this part until the final disbursement of such loan has been made, except that the prohibition of this subsection shall not apply if—

(1)

the sale of the loan does not result in a change in the identity of the party to whom payments will be made for the loan; and

(2)

the first disbursement of such loan has been made.

(Pub. L. 89–329, title IV, § 428G, as added Pub. L. 101–239, title II, § 2004(a), Dec. 19, 1989, 103 Stat. 2115; amended Pub. L. 101–508, title III, § 3003(a), Nov. 5, 1990, 104 Stat. 1388–26; Pub. L. 102–325, title IV, § 421, July 23, 1992, 106 Stat. 534; Pub. L. 103–66, title IV, § 4109(b), Aug. 10, 1993, 107 Stat. 369; Pub. L. 103–208, § 2(c)(41), Dec. 20, 1993, 107 Stat. 2466; Pub. L. 105–244, title IV, § 422(a)–(c), Oct. 7, 1998, 112 Stat. 1696; Pub. L. 109–171, title VIII, § 8010, Feb. 8, 2006, 120 Stat. 164; Pub. L. 110–315, title IV, § 427, Aug. 14, 2008, 122 Stat. 3235; Pub. L. 111–39, title IV, § 402(f)(4), July 1, 2009, 123 Stat. 1943.)

cite as: 20 USC 1078-7