100 STAT. 1366
U.M'
PUBLIC LAW 99-498—OCT. 17, 1986 percent, then an adjustment shall be made to a borrower's account— "(A) by calculating excess interest in the amount computed under paragraph (2) of this subsection; and "(B) by crediting the excess interest to the reduction of principal to the extent provided for under paragraph (3) of this subsection. "(2) AMOUNT OF ADJUSTMENT.—The amount of any adjust-
ment of interest on a loan to be made under this subsection for any quarter shall be equal to— "(A) 10 percent minus the sum of (i) the average of the bond equivalent rates of 91-day Treasury bills auctioned for such calendar quarter, and (ii) 3.25 percent; multiplied by "(B) the outstanding principal balance of the loan (not including unearned interest added to principal) at the end of such calendar quarter; divided by "(C) four. "(3) ANNUAL ADJUSTMENT OF INTEREST AND BORROWER ELIGI-
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BiliTY FOR CREDIT.—Any adjustment amount computed pursuant to paragraph (2) of this subsection for any quarter shall be credited, by the holder of the loan on the last day of the calendar year in which such quarter falls, to the loan account of the borrower so as to reduce the principal balance of such account. No such credit shall be made to the loan account of a borrower who on the last day of the calendar year is delinquent for more than 30 days in making a required payment on the loan. Any credit which is to be made to a borrower's account pursuant to this subsection shall be made effective commencing no later than 30 days following the last day of the calendar year in which the quarter falls for which the credit is being made. Nothing in this subsection shall be construed to require refunding any repayment of a loan. At the option of the lender, the amount of such adjustment may be distributed to the borrower either by reduction in the amount of the periodic payment on the loan, or by reducing the number of payments that shall be made with respect to the loan. "(4) PUBLICATION OF TREASURY BILL RATE.—For the purpOSe o f
enabling holders of loans to make the determinations and adjustments provided for in this subsection, the Secretary shall for each calendar quarter commencing with the quarter beginning on July 1, 1987, publish a notice of the average of the bond equivalent rates of 91-day Treasury bills auctioned for such quarter. Such notice shall be published not later than 7 days after the end of the quarter to which the notice relates. "(5) STUDY OF TREATMENT OF EXCESS INTEREST PAYMENTS PROVI-
SIONS.—The Secretary shall examine and evaluate the provisions of this subsection, and not later than 6 months after the date of enactment of the Higher Education Amendments of 1986, prepare and submit to the Congress such legislative proposals as the Secretary determines are necessary to carry out the objectives of this subsection. "(f) LESSER RATES PERMITTED.—Nothing in this section or section 428C shall be construed to prohibit a lender from charging a borrower interest at a rate less than the rate which is applicable under this part.
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