TITLE IV--STUDENT ASSISTANCE
Part B--Federal Family Education Loan Program
SEC. 427. LEGAL POWERS AND RESPONSIBILITIES
(a) AUDIT OF FINANCIAL TRANSACTIONS- Section 432(f)(1) is amended--
(1) in subparagraph (B), by striking `section 435(d)(1) (D), (F), or (H);' and inserting `section 435(d)(1); and';
(2) in subparagraph (C)--
(A) by striking `and Labor' and inserting `and the Workforce'; and
(B) by striking `; and' inserting a period; and
(3) by striking subparagraph (D).
(b) PROGRAM OF ASSISTANCE- Section 432(k)(3) is amended by striking `Within 1 year' and everything that follows through `1992, the' and inserting `The'.
(c) COMMON FORMS AND FORMATS- Section 432(m) is amended--
(1) in paragraph (1)--
(A) in subparagraph (A), by striking `a common application form and promissory note' and inserting `common application forms and promissory notes, or master promissory notes,';
(B) in subparagraph (B)--
(i) by striking `The form' and inserting `The forms';
(ii) by striking clause (iii); and
(C) by amending subparagraph (C) to read as follows:
`(C) FREE APPLICATION FORM- For academic year 1999-2000 and succeeding academic years, the Secretary shall prescribe the form developed under section 483 as the application form under this part, other than for loans under sections 428B and 428C.';
(D) by amending subparagraph (D) to read as follows:
`(D) MASTER PROMISSORY NOTE-
`(i) IN GENERAL- The Secretary shall develop and require the use of master promissory note forms for loans made under this part and part D. Such forms shall be available for periods of enrollment beginning not later than July 1, 2000. Each form shall allow eligible borrowers to receive, in addition to initial loans, additional loans for the same or subsequent periods of enrollment through a student confirmation process approved by the Secretary. Such forms shall be used for loans made under this part or part D as directed by the Secretary.
`(ii) CONSULTATION- In developing the master promissory note under this subsection, the Secretary shall consult with representatives of guaranty agencies, eligible lenders, institutions of higher education, students, and organizations involved in student financial assistance.
`(iii) SALE; ASSIGNMENT; ENFORCEABILITY- Notwithstanding any other provision of law, each loan made under a master promissory note under this subsection may be sold or assigned independently of any other loan made under the same promissory note and each such loan shall be separately enforceable in all Federal and State courts on the basis of an original or copy of the master promissory note in accordance with the terms of the master promissory note.
`(iv) PERFECTION OF SECURITY INTERESTS IN STUDENT LOANS- Notwithstanding the provisions of any State law to the contrary, including the Uniform Commercial Code as in effect in any State, a security interest in loans made under this part created on behalf of any eligible lender as defined in section 435(d) may be perfected either through the taking of possession of such loans (which can be through taking possession of an original or copy of the master promissory note) or by the filing of notice of such security interest in such loans in the manner provided by such State law for perfection of security interests in accounts.'; and
(2) by adding at the end the following:
`(4) ELECTRONIC FORMS- Nothing in this section shall be construed to limit the development and use of electronic forms and procedures.'.
(d) DEFAULT REDUCTION MANAGEMENT- Section 432(n) is amended--
(1) in paragraph (1), by striking `1993' and inserting `1999'; and
(2) in paragraph (3), by striking `and Labor' and inserting `and the Workforce'.
(e) REPORTING REQUIREMENT- Section 432(p) is amended by striking `State postsecondary reviewing entities designated under subpart 1 of part H,'.
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