§ 3698. Eligibility for Loans; Amount and Conditions of Loans; Interest Rate on Loans

     (a)(1) Subject to paragraph (2) of this subsection, each eligible veteran shall be entitled to a loan under this subchapter (if the program of education is pursued in a State) in an amount determined under, and subject to the conditions specified in, subsection (b)(1) of this section if the veteran satisfies the requirements set forth in subsection (c) of this section and the criteria established under subsection (g) of this section.

     (2) Except in the case of a veteran to whom section 3462(a)(2) of this title is applicable, no loan may be made under this subchapter after September 30, 1981.

     (b)(1) Subject to paragraph (3) of this subsection, the amount of the loan to which an eligible veteran shall be entitled under this subchapter for any academic year shall be equal to the amount needed by such veteran to pursue a program of education at the institution at which the veteran is enrolled, as determined under paragraph (2) of this subsection.

     (2)(A) The amount needed by a veteran to pursue a program of education at an institution for any academic year shall be determined by subtracting (i) the total amount of financial resources (as defined in subparagraph (B) of this paragraph) available to the veteran which may be reasonably expected to be expended by such veteran for educational purposes in any year from (ii) the actual cost of attendance (as defined in subparagraph (C) of this paragraph) at the institution in which such veteran is enrolled.

     (B) The term "total amount of financial resources" of any veteran for any year means the total of the following:

     (i) The annual adjusted effective income of the veteran less Federal income tax paid or payable by such veteran with respect to such income.

     (ii) The amount of cash assets of the veteran.

     (iii) The amount of financial assistance received by the veteran under the provisions of title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.).

     (iv) Educational assistance received by the veteran under this title other than under this subchapter.

     (v) Financial assistance received by the veteran under any scholarship or grant program other than those specified in clauses (iii) and (iv).

     (C) The term "actual cost of attendance" means, subject to such regulations as the Secretary may provide, the actual per-student charges for tuition, fees, room and board (or expenses related to reasonable commuting), books, and an allowance for such other expenses as the Secretary determines by regulation to be reasonably related to attendance at the institution at which the veteran is enrolled.

     (3) The aggregate of the amounts any veteran may borrow under this subchapter may not exceed $376 multiplied by the number of months such veteran is entitled to receive educational assistance under section 3461 of this title, but not in excess of $2,500 in any one regular academic year.

     (c) An eligible veteran shall be entitled to a loan under this subchapter if such veteran—

     (1) is in attendance at an educational institution on at least a half-time basis and (A) is enrolled in a course leading to a standard college degree, or (B) is enrolled in a course, the completion of which requires six months or longer, leading to an identified and predetermined professional or vocational objective, except that the Secretary may waive the requirements of subclause (B) of this clause, in whole or in part, if the Secretary determines, pursuant to regulations which the Secretary shall prescribe, it to be in the interest of the eligible veteran and the Federal Government;

     (2) enters into an agreement with the Secretary meeting the requirements of subsection (d) of this section; and

     (3) satisfies any criteria established under subsection (g) of this section.

No loan shall be made under this subchapter to an eligible veteran pursuing a program of correspondence, or apprenticeship or other on-job training.

     (d) Any agreement between the Secretary and a veteran under this subchapter—

     (1) shall include a note or other written obligation which provides for repayment to the Secretary of the principal amount of, and payment of interest on, the loan in installments (A) over a period beginning nine months after the date on which the borrower ceases to be at least a half-time student and ending ten years and nine months after such date, or (B) over such shorter period as the Secretary may have prescribed under subsection (g) of this section;

     (2) shall include provision for acceleration of repayment of all or any part of the loan, without penalty, at the option of the borrower;

     (3) shall provide that the loan shall bear interest, on the unpaid balance of the loan, at a rate prescribed by the Secretary, at the time the loan is contracted for which rate shall be comparable to the rate of interest charged students at such time on loans insured by the Secretary of Education under part B of title IV of the Higher Education Act of 1965, but in no event shall the rate so prescribed by the Secretary exceed the rate charged students on such insured loans, and shall provide that no interest shall accrue prior to the beginning date of repayment; and

     (4) shall provide that the loan shall be made without security and without endorsement.

     (e)(1) Except as provided in paragraph (2) of this subsection, whenever the Secretary determines that a default has occurred on any loan made under this subchapter, the Secretary shall declare an overpayment, and such overpayment shall be recovered from the veteran concerned in the same manner as any other debt due the United States.

     (2) If a veteran who has received a loan under this section dies or becomes permanently and totally disabled, then the Secretary shall discharge the veteran’s liability on such loan by repaying the amount owed on such loan.

     (f) Payment of a loan made under this section shall be drawn in favor of the eligible veteran and mailed promptly to the educational institution in which such veteran is enrolled. Such institution shall deliver such payment to the eligible veteran as soon as practicable after receipt thereof. Upon delivery of such payment to the eligible veteran, such educational institution shall promptly submit to the Secretary a certification, on such form as the Secretary shall prescribe, of such delivery, and such delivery shall be deemed to be an advance payment under section 3680(d)(4) of this title for purposes of section 3684(b) of this title.

     (g)(1) The Secretary shall conduct, on a continuing basis, a review of the default experience with respect to loans made under this section.

     (2)(A) To ensure that loans are made under this section on the basis of financial need directly related to the costs of education, the Secretary may, by regulation, establish (i) criteria for eligibility for such loans, in addition to the criteria and requirements prescribed by subsections (c) and (d) of this section, in order to limit eligibility for such loans to eligible veterans attending educational institutions with relatively high rates of tuition and fees, and (ii) criteria under which the Secretary may prescribe a repayment period for certain types of loans made under this section that is shorter than the repayment period otherwise applicable under subsection (d)(1)(A) of this section. Criteria established by the Secretary under clause (i) of the preceding sentence may include a minimum amount of tuition and fees that an eligible veteran may pay in order to be eligible for such a loan (except that any such criterion shall not apply with respect to a loan for which the veteran is eligible as a result of an extension of the period of eligibility of such veteran for loans under this section provided for by section 3462(a)(2) of this title).

     (B) In prescribing regulations under subparagraph (A) of this paragraph, the Secretary shall take into consideration information developed in the course of the review required by paragraph (1) of this subsection.

     (C) Regulations may be prescribed under subparagraph (A) of this paragraph only after opportunity has been afforded for public comment thereon.

(Added Pub. L. 93–508, title III, § 301(a), Dec. 3, 1974, 88 Stat. 1589, § 1798; amended Pub. L. 94–502, title V, §§ 502(a), 513(a)(23), Oct. 15, 1976, 90 Stat. 2399, 2403; Pub. L. 95–202, title I, § 104(3), title II, § 202, Nov. 23, 1977, 91 Stat. 1435, 1438; Pub. L. 95–476, title II, § 201, Oct. 18, 1978, 92 Stat. 1502; Pub. L. 96–466, title II, §§ 203(4), 213(4), title VI, §§ 601(h), 603(b), title VIII, § 801(g), Oct. 17, 1980, 94 Stat. 2189, 2191, 2208, 2209, 2216; Pub. L. 97–35, title XX, § 2005(d), Aug. 13, 1981, 95 Stat. 783; Pub. L. 97–295, § 4(60), Oct. 12, 1982, 96 Stat. 1309; Pub. L. 97–306, title II, § 208, Oct. 14, 1982, 96 Stat. 1436; Pub. L. 98–543, title II, § 204(3), Oct. 24, 1984, 98 Stat. 2742; Pub. L. 100–689, title I, § 124(b), Nov. 18, 1988, 102 Stat. 4174; Pub. L. 101–237, title IV, § 423(b)(1)(A), Dec. 18, 1989, 103 Stat. 2092; Pub. L. 102–16, § 5(a), Mar. 22, 1991, 105 Stat. 50; renumbered § 3698 and amended Pub. L. 102–83, § 5(a), (c)(1), Aug. 6, 1991, 105 Stat. 406.)

References in Text

     The Higher Education Act of 1965, referred to in subsecs. (b)(2)(B)(iii) and (d)(3), is Pub. L. 89–329, Nov. 8, 1965, 79 Stat. 1219, as amended. Title IV of the Higher Education Act of 1965 is classified generally to subchapter IV (§ 1070 et seq.) of chapter 28 of Title 20, Education, and part C (§ 2751 et seq.) of subchapter I of chapter 34 of Title 42, The Public Health and Welfare. Part B of title IV of the Higher Education Act of 1965, is classified generally to Part B of subchapter IV (§ 1071 et seq.) of chapter 28 of Title 20. For complete classification of this Act to the Code, see Short Title note set out under section 1001 of Title 20 and Tables.

     1991—Pub. L. 102–83, § 5(a), renumbered section 1798 of this title as this section.

     Subsec. (a)(2). Pub. L. 102–83, § 5(c)(1), substituted "3462(a)(2)" for "1662(a)(2)".

     Subsec. (b)(3). Pub. L. 102–83, § 5(c)(1), substituted "3461" for "1661".

     Subsec. (e)(3). Pub. L. 102–16 struck out par. (3) which read as follows: "The Secretary shall submit to the appropriate committees of the Congress not later than December 31 of each year a report on the current results of the continuing review required by subsection (g)(1) of this section to be made regarding the default experience with respect to loans made under this section and any steps being taken to reduce default rates on such loans. Such report shall include—

"(A) data regarding the cumulative default experience, and the default experience during the preceding fiscal year, with respect to such loans; and

"(B) data regarding the default experience and default rate with respect to loans made under this section."

     Subsec. (f). Pub. L. 102–83, § 5(c)(1), substituted "3680(d)(4)" for "1780(d)(4)" and "3684(b)" for "1784(b)".

     Subsec. (g)(2)(A). Pub. L. 102–83, § 5(c)(1), substituted "3462(a)(2)" for "1662(a)(2)".

     1989—Subsecs. (b)(2)(C), (c) to (g). Pub. L. 101–237 substituted "Secretary" for "Administrator" wherever appearing.

     1988—Subsec. (a)(1). Pub. L. 100–689, § 124(b)(1), (2), substituted "eligible veteran" for "eligible veteran and eligible person", inserted "(if the program of education is pursued in a State)", and substituted "veteran satisfies" for "veteran or person satisfies".

     Subsec. (b)(1). Pub. L. 100–689, § 124(b)(1), (3)(A), substituted "eligible veteran" for "eligible veteran or eligible person", "needed by such veteran" for "needed by such veteran or person", and "veteran is enrolled" for "veteran or person is enrolled".

     Subsec. (b)(2)(A). Pub. L. 100–689, § 124(b)(1), substituted "a veteran" for "a veteran or person", "the veteran" for "the veteran or person", and "such veteran" for "such veteran or person" in two places.

     Subsec. (b)(2)(B). Pub. L. 100–689, § 124(b)(1), substituted in introductory text "any veteran" for "any veteran or person", in cl. (i) "such veteran" for "such veteran or person", and in cls. (i) to (v) "the veteran" for "the veteran or person".

     Subsec. (b)(2)(C). Pub. L. 100–689, § 124(b)(1), substituted "the veteran" for "the veteran or person".

     Subsec. (b)(3). Pub. L. 100–689, § 124(b)(1), (3)(B), substituted "any veteran" for "any veteran or person", "such veteran" for "such veteran or person", and "under section 1661" for "under section 1661 or subchapter II of chapter 35, respectively,".

     Subsec. (c). Pub. L. 100–689, § 124(b)(1), struck out "or person" after "eligible veteran" and after "such veteran" in introductory text and after "eligible veteran" in closing provisions.

     Subsec. (d). Pub. L. 100–689, § 124(b)(1), substituted in introductory text "a veteran" for "a veteran or person".

     Subsec. (e)(1). Pub. L. 100–689, § 124(b)(1), struck out "or person" after "the veteran".

     Subsec. (e)(2). Pub. L. 100–689, § 124(b)(1), (4)(A), struck out "or person" after "a veteran" and "or person’s" after "the veteran’s".

     Subsec. (e)(3)(B). Pub. L. 100–689, § 124(b)(4)(B), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: "data regarding the default experience and default rate with respect to (i) loans made under this section in connection with accelerated payments under section 1682A of this title, and (ii) other loans made under this section."

     Subsec. (f). Pub. L. 100–689, § 124(b)(5), struck out par. (2) designation, struck out par. (1) which read as follows: "At the time of application by any eligible veteran for a loan under this section, such veteran shall assign to the benefit of the Veterans’ Administration (for deposit in the Veterans’ Administration Education Loan Fund established under section 1799 of this title) the amount of any accelerated payment to which such eligible veteran may become entitled from the Administrator and any matching contribution by a State or local governmental unit pursuant to section 1682A(b)(8) of this title in connection with the school term for which such veteran has applied.", and struck out par. (3) which read as follows: "For purposes of this subsection, the term `eligible veteran’ includes eligible person as such term is defined in section 1701(a)(1) of this title."

     Subsec. (g)(2)(A). Pub. L. 100–689, § 124(b)(6), substituted "eligible veterans" for "eligible veterans and eligible persons" and "eligible veteran" for "eligible veteran or eligible person".

     1984—Subsec. (b)(3). Pub. L. 98–543 substituted "$376" for "$342".

     1982—Subsec. (b)(2)(B)(iii). Pub. L. 97–295 substituted "(20 U.S.C. 1070 et seq.)" for ", as amended".

     Subsec. (e)(3). Pub. L. 97–306, § 208(1), struck out "in maximum feasible detail" after "Such report shall include".

     Subsec. (e)(3)(B). Pub. L. 97–306, § 208(3), substituted provisions requiring data regarding the default experience and default rate with respect to loans made under this section in connection with accelerated payments under section 1682A of this title, and other loans made under this section, for provisions which had required data regarding the default experience and default rate at each educational institution with respect to loans made under this section in connection with accelerated payments under section 1682A of this title, and with respect to other loans made under this section.

     Subsec. (e)(3)(C). Pub. L. 97–306, § 208(3), struck out subpar. (C) which had required comparisons of the collective default experience and default rates with respect to such loans at all such institutions to the default experience and default rates with respect to such loans at each such institution.

     1981—Subsec. (a). Pub. L. 97–35 designated existing provisions as par. (1), inserted reference to par. (2), and added par. (2).

     1980—Subsec. (b)(3). Pub. L. 96–466, § 213(4), substituted "$342" for "$327".

     Pub. L. 96–466, § 203(4), substituted "$327" for "$311".

     Subsec. (c). Pub. L. 96–466, § 603(b), substituted "or apprenticeship or other on-job training" for "flight, apprentice, or other on-job, or PREP training" in last sentence.

     Subsec. (d)(3). Pub. L. 96–466, § 801(g), substituted "Secretary of Education" for "Commissioner of Education, Department of Health, Education, and Welfare".

     Subsec. (f)(2). Pub. L. 96–466, § 601(h), substituted "section 1780(d)(4)" for "section 1780(d)(5)".

     1978—Subsec. (a). Pub. L. 95–476, § 201(1), inserted "and the criteria established under subsection (g) of this section" after "subsection (c) of this section".

     Subsec. (c)(3). Pub. L. 95–476, § 201(2)(C), added par. (3).

     Subsec. (d)(1). Pub. L. 95–476, § 201(3), substituted "installments (A) over" for "installments over" and added cl. (B).

     Subsec. (e)(3). Pub. L. 95–476, § 201(4), substituted provisions requiring the Administrator to submit to the appropriate committees of Congress not later than Dec. 31 of each year a report on the results of the continuing default experience review required by subsec. (g)(1) of this section and specifying the data to be included in each such report for provisions requiring the Administrator to submit to the Committees on Veterans’ Affairs of the Senate and the House of Representatives, not later than one year after Dec. 3, 1974, and annually thereafter, separate default experience reports regarding accelerated and non-accelerated repayment loans.

     Subsec. (f)(3). Pub. L. 95–476, § 201(5), substituted "section 1701(a)(1)" for "section 1701(1)".

     Subsec. (g). Pub. L. 95–476, § 201(6), added subsec. (g).

     1977—Subsec. (b)(3). Pub. L. 95–202, §§ 104(3), 202(1), substituted "$311" for "$292" and "$2,500" for "$1,500".

     Subsec. (c)(1). Pub. L. 95–202, § 202(2)(A), authorized the Administrator to waive the requirements of subclause (B), in whole or in part, if the Administrator determines, pursuant to regulations which the Administrator prescribes, that it is in the interest of the eligible veteran and the Federal Government.

     Subsec. (c)(2), (3). Pub. L. 95–202, § 202(2)(B), redesignated par. (3) as (2). Former par. (2), directing that the agreement include a provision for acceleration of repayment of all or any part of the loan, without penalty, at the option of the borrower, was struck out.

     Subsec. (e)(3). Pub. L. 95–202, § 202(3), inserted "separately with respect to loans made under this section the repayment of which is accelerated under section 1682A of this title and loans made under this section the repayment of which is not so accelerated" after "default rate at all such institutions".

     Subsec. (f). Pub. L. 95–202, § 202(4), added subsec. (f).

     1976—Subsec. (b)(1). Pub. L. 94–502, § 513(a)(23), substituted "the veteran or person is enrolled" for "he is enrolled".

     Subsec. (b)(3). Pub. L. 94–502, § 502(a)(1), substituted "$292" for "$270" and "$1,500" for "$600".

     Subsec. (d)(3). Pub. L. 94–502, § 502(a)(2), substituted provision changing the interest rate on loans to a rate comparable to the rate of interest charged students on loans insured by the Commissioner of Education, Department of Health, Education, and Welfare under part B of title IV of the Higher Education Act of 1965 for provision which authorized a rate which was to be determined by the Secretary, with the concurrence of the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States.

     Subsec. (e)(1). Pub. L. 94–502, § 513(a)(23), substituted "the Administrator shall declare" for "he shall declare".

     Amendment by Pub. L. 98–543 effective Oct. 1, 1984, see section 205 of Pub. L. 98–543, set out as a note under section 3108 of this title.

     Amendment by Pub. L. 97–35 effective Oct. 1, 1981, except as otherwise provided, see section 2006 of Pub. L. 97–35, set out as a note under section 3231 of this title.

     Amendment by sections 203(4) and 213(4) of Pub. L. 96–466 effective Oct. 1, 1980, and Jan. 1, 1981, respectively, see section 802(b) of Pub. L. 96–466, set out as a note under section 3482 of this title.

     Amendment by sections 601(h) and 603(b) of Pub. L. 96–466 effective Oct. 1, 1980, except that amendment by section 603(b) of Pub. L. 96–466 not applicable to any person receiving educational assistance under chapter 34 or 35 of this title on Sept. 1, 1980, for the pursuit of a program of education in which such person is enrolled on that date, for as long as such person continuously thereafter is so enrolled and meets the requirements of eligibility for such assistance for the pursuit of such program under the provisions of such chapter and chapter 36 of this title as in effect on that date, see section 802(f) of Pub. L. 96–466, set out as an Effective Date note under section 5314 of this title.

     Amendment by section 801(g) of Pub. L. 96–466 effective Oct. 1, 1980, see section 802(h) of Pub. L. 96–466, set out as an Effective Date note under section 3452 of this title.

     Amendment of section by Pub. L. 95–476 effective Oct. 18, 1978, see section 205(a) of Pub. L. 95–476, set out as a note under section 2303 of this title.

     Amendment by section 114(3) of Pub. L. 95–202 effective retroactively to Oct. 1, 1977, and amendment by section 202 of Pub. L. 95–202 effective Jan. 1, 1978, see section 501 of Pub. L. 95–202, set out as a note under section 101 of this title.

     Section 502(b) of Pub. L. 94–502 provided that: "The amendments made by subsection (a) [amending this section] shall be effective with respect to loans made under section 1798 [now 3698] of title 38, United States Code, on and after October 1, 1976."

     Amendment by sections 502 and 513(a)(23) of Pub. L. 94–502 effective Oct. 1, 1976, and Oct. 15, 1976, respectively, see section 703(a), (b) of Pub. L. 94–502, set out as an Effective Date note under section 3693 of this title.

     Section 502 of Pub. L. 93–508 provided that: "Title III of this Act [enacting this section and sections 1686 [repealed], 1737 [repealed], and 1799 [now 3699] of this title] shall become effective on January 1, 1975, except that eligible persons shall, upon application, be entitled (and all such persons shall be notified by the Administrator of Veterans’ Affairs of such entitlement) to a loan under the new subchapter III of chapter 36 of title 38, United States Code, as added by section 301 of this Act, the terms of which take into account the full amount of the actual cost of attendance (as defined in section 1798(b)(2)(C) [now 3698(b)(2)(C)] of such title) which such persons incurred for the academic year beginning on or about September 1, 1974."

     This section is referred to in section 3699 of this title.