20 U.S.C. § 1087d — Agreements with institutions

(a) Participation agreements. An agreement with an institution for participation in the direct student loan program under this part must: (1) establish and maintain a direct student loan program under which the institution will: (A) identify eligible students seeking student aid at the institution under section 1091; (B) estimate each student’s need for an academic year as required by part F. A loan under this part with the same terms as a loan under section 1078–8, except as this part provides otherwise, may be used to offset the student aid index for that year. So may a parent loan under this part with the same terms as a loan under section 1078–2, except as this part provides otherwise, and a loan under a State-sponsored or private loan program; (C) certify that a student is eligible for a loan under this part and that the loan does not exceed its annual or total limit. In exceptional circumstances identified by the Secretary, the institution may refuse to certify a loan or may certify less than the student’s determined need. It may do so only if it documents the reason and gives it to the student in writing; (D) set a schedule for paying out the loan in installments consistent with section 1078–7; and (E) give the Secretary timely and accurate information: (i) about student borrowers, and students for whom parents borrow, while they attend the institution, plus new information the institution learns about those students or parents after they leave, so loans under this part can be serviced and collected; and (ii) if the institution has no agreement with the Secretary under subsection (b), about student eligibility and need determined under subparagraphs (A) and (B), as needed for the alternative origination of loans to eligible students and parents under this part; (2) assure compliance with the Secretary’s requirements about information for loans under this part; (3) make the institution responsible and financially liable for failing to perform its functions under the agreement; (4) implement a quality-assurance system established by the Secretary in consultation with institutions, to ensure compliance with program requirements and achievement of program objectives; (5) bar the institution from charging student or parent borrowers any fee, however described, for originating a loan, giving information needed to receive a loan, or giving any benefit connected with the loan; (6) assure that, starting July 1, 2026, the institution will follow all requirements of subsection (c); and (7) include other provisions the Secretary decides are needed to protect United States interests and promote this part’s purposes. (b) Origination. An agreement with an institution or group of institutions for originating loans under this part must: (1) supplement the agreement under subsection (a); (2) include Secretary-established provisions similar to those in subsection (a)(1)(E)(ii) and paragraphs (2), (3), (4), (5), (6), and (7), modified for loan origination by the institution or group; (3) require the institution or group to originate loans to eligible students and parents under this part; and (4) provide that the Secretary owns the loan note or other evidence of the obligation. (c) Ineligibility for certain programs based on low earning outcomes. (1) General rule. Despite section 1088(b), an institution subject to this subsection may not use funds under this part to enroll a student in an educational program described in paragraph (2). (2) Programs described. A program is described here if it awards an undergraduate, graduate, or professional degree, or a graduate certificate, and the median earnings determined by the Secretary for the program’s cohort are lower than the median earnings of the working adult described in paragraph (3) for the corresponding year for at least 2 of the 3 years immediately before the determination. The cohort consists of students who received funds under this subchapter to enroll in the program, completed it during the academic year 4 years before the determination year, are not enrolled in an institution of higher education, and are working. (3) Calculating median earnings. (A) Working adult. For applying paragraph (2), a “working adult” means a working adult who, for the corresponding year: (i) is 25 through 34 years old; (ii) is not enrolled in an institution of higher education; and (iii)(I) for an undergraduate or lesser-degree program, has only a high school diploma or recognized equivalent; or (II) for a graduate or professional program, has only a bachelor’s degree. (B) Data source. The working adult median must use Bureau of the Census data: (i) for an undergraduate or lesser-degree program, from: (I) the State where the institution is located; or (II) the entire United States if fewer than half the institution’s students live in that State; and (ii) for a graduate or professional program: (I) the lowest median earnings among a working adult in the institution’s State, a working adult in the same field of study in that State, and a working adult in the same field of study in the entire United States; or (II) if fewer than half the students live in the institution’s State, the lower median earnings of a working adult in the entire United States or a working adult in the same field in the entire United States. The Secretary determines the field, including by using a 2-digit CIP code. (4) Small program cohorts. If the paragraph (2) cohort has fewer than 30 people in a year, the Secretary must first combine additional years of program data to reach at least 30 people. If it is still below 30, the Secretary must then combine additional cohort years for programs of equivalent length to reach at least 30. (5) Appeals. A program may not lose eligibility under this subsection unless the institution had a chance to appeal the paragraph (2) determination about the median earnings of working students who are not enrolled. The Secretary establishes the appeal process and may allow the program to continue participating while the appeal is pending. (6) Notice to students. (A) General rule. If a program subject to this subsection fails the cohort median-earnings requirement for one year during the covered period, but has not failed it for two years during that period, the institution must promptly tell every enrolled student that the eligible program has low cohort median earnings and is at risk of losing eligibility for funds under this part. (B) Covered period. “Covered period” means the 3 years immediately before a determination under paragraph (2). (7) Regaining eligibility. The Secretary must establish a process allowing an institution whose program lost eligibility to apply to regain it after the program has been ineligible for at least 2 years. The process must follow Secretary-established requirements that further this subsection’s purpose. (d) Withdrawal and termination procedures. The Secretary must establish procedures allowing institutions or groups of institutions to withdraw from, or be terminated from, the program under this part.