TITLE IV--STUDENT ASSISTANCE
Part B--Federal Family Education Loan Program
SEC. 420. FEDERAL CONSOLIDATION LOANS
(a) DEFINITION OF ELIGIBLE BORROWER- Section 428C(a)(3) (20 U.S.C. 1078-3(a)(3)) is amended by striking everything preceding subparagraph (C) and inserting the following:
`(3) DEFINITION OF ELIGIBLE BORROWER- (A) For the purpose of this section, the term `eligible borrower' means a borrower who--
`(i) is not subject to a judgment secured through litigation with respect to a loan under this title or to an order for wage garnishment under section 488A; and
`(ii) at the time of application for a consolidation loan--
`(I) is in repayment status;
`(II) is in a grace period preceding repay-ment; or
`(III) is a defaulted borrower who has made arrangements to repay the obligation on the defaulted loans satisfactory to the holders of the defaulted loans.
`(B)(i) An individual's status as an eligible borrower under this section terminates upon receipt of a consolidation loan under this section, except that--
`(I) an individual who receives eligible student loans after the date of receipt of the consolidation loan may receive a subsequent consolidation loan;
`(II) loans received prior to the date of the consolidation loan may be added during the 180-day period following the making of the consolidation loan;
`(III) loans received following the making of the consolidation loan may be added during the 180-day period following the making of the consolidation loan; and
`(IV) loans received prior to the date of the first consolidation loan may be added to a subsequent consolidation loan.'.
(b) DEFINITION OF ELIGIBLE STUDENT LOAN- Section 428C(a)(4) is amended by striking subparagraph (C) and inserting the following:
`(C) made under part D of this title;'.
(c) CONTENTS OF AGREEMENTS- Section 428C(b) is amended--
(1) in paragraph (1)(A)(i), by inserting `except that this clause shall not apply in the case of a borrower with multiple holders of loans under this part,' after `under this section,';
(2) in paragraph (4)(C)(ii)--
(A) in the matter preceding subclause (I), by inserting `during any such period' after `and be paid';
(B) in subclause (I), by striking `, or on or after October 1, 1998,'; and
(C) in subclause (II), by striking `and before October 1, 1998,';
(3) in paragraph (6)(A), by inserting before the semicolon at the end the following: `, except that a lender is not required to consolidate loans described in subparagraph (D) or (E) of subsection (a)(4) or subsection (d)(1)(C)(ii)'.
(d) EXTENSION OF AUTHORITY- Section 428C(e) is amended by striking `September 30, 2002' and inserting `September 30, 2004'.
(e) SPECIAL RULE- Section 428C(f) is amended--
(1) by redesignating paragraph (2) as paragraph (3); and
(2) by inserting after paragraph (1) the following:
`(2) SPECIAL RULE- For consolidation loans based on applications received during the period from October 1, 1998 through January 31, 1999, inclusive, the rebate described in paragraph (1) shall be equal to 0.62 percent of the principal plus accrued unpaid interest on such loan.'.
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