106 STAT. 536 PUBLIC LAW 102-325—JULY 23, 1992 428(b)(l)(M) shall, if agreed upon by the borrower and the lender (A) be paid monthly or quarterly, or (B) be added to the principal amount of me loan not more frequently than quarterly by the lender. Such capitalization of interest shall not be deemed to exceed the annual insurable limit on account of the student. "(3) SUBSIDIES PROHIBITED. —No payments to reduce interest costs shall be paid pursuant to section 428(a) of this part on loans made pursuant to this section. "(4) APPLICABLE RATES OF INTEREST.—Interest on loans made pursuant to this section shall be at the applicable rate of mterest provided in section 427A(e).
- (f) INSURANCE PREMIUM. —
"(1) AMOUNT OP ORIGINATION FEE/INSURANCE PREMIUM. —The lender shall charge the borrower a combined origination fee and insurance premium in the amount of 6.5 percent of the Erincipal amount of the loan, to be deducted proportionately
- om each installment payment of the proceeds of the loan
prior to payment to the borrower. A guaranty agency may not charge an insurance premium on any loan made under this section. "(2) RELATION TO APPLICABLE INTEREST.— Such combined fee and premiimi shall not be taken into account for purposes of determining compliance with section 427A.
- (3) DISCLOSURE REQUIRED. —The lender shall disclose to the
borrower the amount and method of calculating the combined origination fee and insurance premium.
- X4) USE OF INSURANCE PREMIUM TO OFFSET DEFAULT COSTS.—
Each lender making loans under this section shall transmit all combined origination fee and insurance premiiims authorized to be collected from borrowers to the Secretary, who shall use such fees and premiums to pay the Federal costs of default claims paid for loans under this section and to reduce the cost of special allowances paid thereon, if any, under section 438(b). "(5) REVIEW OF INSURANCE PREMIUM. — In fiscal year 1995, the Secretary is directed to analyze the risk rates of borrowers who have participated in this program in the 2 previous fiscal yesirs. If me Secretary finds, that as a result of this review, the projected defaults and special allowance costs of the unsuDsidized program do not exceed the 6.5 percent insiirance premium, the Secretary is directed to lower the insurance premium accordingly. "(g) SINGLE APPLICATION FORM AND LOAN REPAYMENT SCHED- ULE.— A guaranty agency shall use a single application form and a single repayment schedule for subsidized Federal Stafford loans made pursuant to section 428 and for unsubsidized Federal Stafford loans made pursuant to this section. "SPECIAL INSURANCE AND REINSURANCE RULES 20 USC 1078-9.
- SEC. 4281. (a) DESIGNATION OF LENDERS, SERVICERS, AND GUAR-
ANTY AGENCIES.— "(1) AUTHORITY. — W henever the Secretary determines that an eligible lender, servicer, or guaranty agency has a compliance performance rating that equals or exceeds 97 percent, the Secretary shall designate the eligible lender, servicer, or guaranty agency, as the case may be, for exceptional perform-
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