42 USC 12604 - Disbursement of educational awards

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

§ 12604.

Disbursement of educational awards

(a)

In general

Amounts in the Trust shall be available—

(1)

to repay student loans in accordance with subsection (b);

(2)

to pay all or part of the cost of attendance or other educational expenses at an institution of higher education in accordance with subsection (c);

(3)

to pay expenses incurred in participating in an approved school-to-work program in accordance with subsection (d);

(4)

to pay expenses incurred in enrolling in an educational institution or training establishment that is approved under chapter 36 of title 38, or other applicable provisions of law, for offering programs of education, apprenticeship, or on-job training for which educational assistance may be provided by the Secretary of Veterans Affairs; and

(5)

to pay interest expenses in accordance with regulations prescribed pursuant to subsection (e).

(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, an eligible individual under section 12602(a) of this title who served in a summer of service program and desires to apply that individual’s summer of service educational award, or an eligible individual under section 12602(a) of this title who served in a silver scholar program and desires to apply that individual’s silver scholar educational award, 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

(3)

Application of disbursed amounts

(4)

Reports by holders

(5)

Notification of individual

(6)

Authority to aggregate payments

(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.), other than a loan to a parent of a student pursuant to section 428B of such Act (20 U.S.C. 1078–2);

(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.]; and

(C)

any loan (other than a loan described in subparagraph (A) or (B)) determined by an institution of higher education to be necessary to cover a student’s educational expenses and made, insured, or guaranteed by—

(i)

an eligible lender, as defined in section 435 of the Higher Education Act of 1965 (20 U.S.C. 1085);

(ii)

the direct student loan program under part D of title IV of such Act (20 U.S.C. 1087a et seq.);

(iii)

a State agency; or

(iv)

a lender otherwise determined by the Corporation to be eligible to receive disbursements from the National Service Trust.

(8)

“Holder” defined

(c)

Use of educational awards to pay current educational expenses

(1)

Application by eligible individual

(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 individual’s national service educational award, summer of service educational award, or silver scholar educational award, as applicable, 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 institution’s eligibility to participate in any of the programs under title IV of such Act (20 U.S.C. 1070 et seq.) has not been limited, suspended, or terminated; and

(iii)

individuals using national service educational awards, summer of service educational awards, or silver scholar educational awards, as applicable, 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

(4)

Multiple disbursements required

(5)

Refund rules

(6)

Maximum award

The portion of an eligible individual’s total available national service educational award, summer of service educational award, or silver scholar educational award that may be disbursed under this subsection for any period of enrollment shall not exceed the difference between—

(A)

the eligible individual’s cost of attendance and other educational expenses 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 student’s estimated financial assistance for such period under part A of title IV of such Act (20 U.S.C. 1070 et seq.).

(d)

Use of educational award to participate in approved school-to-work programs

(e)

Interest payments during forbearance on loan repayment

(f)

Transfer of educational awards

(1)

In general

(2)

Conditions for transfer

An educational award may be transferred under this subsection if—

(A)

(i)

the award is a national service educational award for service in a national service program that receives a grant under division C; and

(ii)

before beginning the term of service involved, the eligible individual is age 55 or older; or

(B)

the award is a silver scholarship educational award under section 12653c(a) of this title.

(3)

Modification or revocation

(A)

In general

(B)

Notice

(4)

Prohibition on treatment of transferred award as marital property

(5)

Death of transferor

(6)

Procedures to prevent waste, fraud, or abuse

(7)

Technical assistance

(8)

Definition of a designated individual

In this subsection, the term “designated individual” is an individual—

(A)

whom an individual who is eligible to receive a national service educational award or silver scholar educational award due to service in a program described in paragraph (2) designates to receive the educational award;

(B)

who meets the eligibility requirements of paragraphs (3) and (4) of section 12602(a) of this title; and

(C)

who is a child, foster child, or grandchild of the individual described in subparagraph (A).

(g)

Exception

(h)

“Institution of higher education” defined

(Pub. L. 101–610, title I, § 148, as added Pub. L. 103–82, title I, § 102(a), Sept. 21, 1993, 107 Stat. 820; amended Pub. L. 105–244, title I, § 102(c)(2), Oct. 7, 1998, 112 Stat. 1622; Pub. L. 111–13, title I, § 1405, Apr. 21, 2009, 123 Stat. 1515.)

cite as: 42 USC 12604