116 STAT. 10 PUBLIC LAW 107-139—FEB. 8, 2002 SEC. 2. EXTENSION OF SPECIAL ALLOWANCE PROVISION. Section 438(b)(2)(I) of the Higher Education Act of 1965 (20 U.S.C. 1087-l(b)(2)(I)) is amended— (1) by striking ", AND BEFORE JULY i, 2003" in the heading; (2) by striking "and before July 1, 2003," each place it appears, other than in clauses (ii) and (v); (3) by striking clause (ii) and inserting the following: "(ii) IN SCHOOL AND GRACE PERIOD.— In the case of any loan— "(I) for which the first disbursement is made on or after January 1, 2000, and before July 1, 2006, and for which the applicable rate of interest is described in section 427A(k)(2); or "(II) for which the first disbursement is made on or after July 1, 2006, and for which the applicable rate of interest is described in section 427A(1)(1), but only with respect to (aa) periods prior to the beginning of the repayment period of the loan; or (bb) during the periods in which principal need not be paid (whether or not such principal is in fact paid) by resison of a provision described in section 427(a)(2)(C) or 428(b)(l)(M); clause (i)(III) of this subparagraph shall be applied by substituting '1.74 percent' for '2.34 percent'."; (4) in clause (iii), by inserting "or (1)(2)" after "427A(k)(3)"; (5) in clause (iv), by inserting "or (1)(3)" after "427A(k)(4)"; (6) in clause (v)— (A) in the heading, by inserting "BEFORE JULY 1, 2006" after "PLUS LOANS"; and (B) by striking "July 1, 2003," and inserting "July 1, 2006,"; (7) in clause (vi)— (A) by inserting "or (1)(3)" after "427A(k)(4)" the first place it appears; and (B) by inserting "or (1)(3), whichever is applicable" after "427A(k)(4)" the second place it appears; and (8) by adding at the end the following new clause: "(vii) LIMITATION ON SPECIAL ALLOWANCES FOR PLUS LOANS ON OR AFTER JULY 1, 2006. —In the Case of PLUS loans made under section 428B and first disbursed on or after July 1, 2006, for which the interest rate is determined under section 427A(1)(2), a special allowance shall not be paid for such loan during any 12-month period beginning on July 1 and ending on June 30 unless—
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