PUBLIC LAW 102-408—OCT. 13, 1992 106 STAT. 2005 term and long-term procedures that such institution will have in place to minimize defaults on loans to borrowers under this subpart. Under such plan the institution shall, among other measures, provide an exit interview to all borrowers that includes information concerning repayment schedules, loan deferments, forbearance, and the consequences of default. " (3) HIGH-RISK RATE.— "(A) IN GENERAL.—With respect to an eligible borrower seeking to obtain a loan for attendance at an eligible institution that has a default rate of in excess of 10 percent but not to exceed 20 percent— "(i) such borrower shall be assessed a risk-based premium in an amount equal to 8 percent of the principal amount of the loan; and "(ii) such institution shall be assessed a risk-based premium in an amount equal to 10 percent of the principal amount of the loan. ^'(B) DEFAULT MANAGEMENT PLAN.—An institution of the type described in subparagraph (A) shall prepare and submit to the Secretary for approval a plan that meets the requirements of paragraph (2)(B). "(4) INELIGIBILITY.—An individual shall not be eligible to obtain a loan under this subpart for attendance at an institution that has a default rate in excess of 20 percent. "(c) REDUCTION OF RISK-BASED PREMIUM. —Lenders shall reduce by 50 percent the risk-based premium to eligible borrowers if a credit worthy parent or other responsible party co-signs the loan note. " (d) ADMINISTRATIVE WAIVERS.— "(1) HEARING. —The Secretary shall afford an institution not less than one hearing, and may consider mitigating circumstances, prior to malung such institution ineligible for participation in the program under this subpart. "(2) EXCEPTIONS.—In carrying out this section with respect to an institution, the Secretary may grant an institution a waiver of requirements of paragraphs (2) through (4) of subsection (b) if the Secretary determines that the default rate for such institution is not an accurate indicator because the volume of the loans under this subpart made by such institution has been insufficient. " (3) TRANSITION FOR CERTAIN INSTITUTIONS.— During the 3-year period beginning on the effective date of the Health Professions Education Extension Amendments of 1992— "(A) subsection (b)(4) shall not apply with respect to any eligible institution that is a Historically Black College or University; and "(B) any such institution that has a default rate in excess of 20 percent, and any eligible borrower seeking a loan for attendance at the institution, shall be subject to subsection (b)(3) to the same extent and in the same manner as eligible institutions and borrowers described in such subsection. "(e) PAYOFF TO REDUCE RISK CATEGORY.—An institution may pay off the outstanding principal and interest owed by the borrowers of such institution who have defaulted on loans made under this subpart in order to reduce the risk category of the institution.
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