# § 297a. Student loan fund
**(a)** **Agreements to establish and operate fund authorized** The Secretary is authorized to enter into an agreement for the establishment and operation of a student loan fund in accordance with this part with any public or nonprofit private school of nursing which is located in a State.
**(b)** **Provisions of agreements** Each agreement entered into under this section shall—
**(1)** provide for establishment of a student loan fund by the school;
**(2)** provide for deposit in the fund, except as provided in section 298d of this title, of (A) the Federal capital contributions paid from allotments under section 297d of this title to the school by the Secretary, (B) an additional amount from other sources equal to not less than one-ninth of such Federal capital contributions, (C) collections of principal and interest on loans made from the fund, (D) collections pursuant to section 297b(f) of this title, and (E) any other earnings of the fund;
**(3)** provide that the fund, except as provided in section 298d of this title, shall be used only for loans to students of the school in accordance with the agreement and for costs of collection of such loans and interest thereon;
**(4)** provide that loans may be made from such fund only to students pursuing a full-time or half-time course of study at the school leading to a baccalaureate or associate degree in nursing or an equivalent degree or a diploma in nursing, or to a graduate degree in nursing; and
**(5)** contain such other provisions as are necessary to protect the financial interests of the United States.
**(c)** **Regulatory standards applicable to collection of loans**
**(1)** Any standard established by the Secretary by regulation for the collection by schools of nursing of loans made pursuant to loan agreements under this part shall provide that the failure of any such school to collect such loans shall be measured in accordance with this subsection. With respect to the student loan fund established pursuant to such agreements, this subsection may not be construed to require such schools to reimburse such loan fund for loans that became uncollectable prior to 1983.
**(2)** The measurement of a school’s failure to collect loans made under this part shall be the ratio (stated as a percentage) that the defaulted principal amount outstanding of such school bears to the matured loans of such school.
**(3)** For purposes of this subsection—
**(A)** the term “default” means the failure of a borrower of a loan made under this part to—
except that a loan made under this part shall not be considered to be in default if the loan is discharged in bankruptcy or if the school reasonably concludes from written contacts with the borrower that the borrower intends to repay the loan;
**(i)** make an installment payment when due; or
**(ii)** comply with any other term of the promissory note for such loan,
**(B)** the term “defaulted principal amount outstanding” means the total amount borrowed from the loan fund of a school that has reached the repayment stage (minus any principal amount repaid or cancelled) on loans—
**(i)** repayable monthly and in default for at least 120 days; and
**(ii)** repayable less frequently than monthly and in default for at least 180 days;
**(C)** the term “grace period” means the period of nine months beginning on the date on which the borrower ceases to pursue a full-time or half-time course of study at a school of nursing; and
**(D)** the term “matured loans” means the total principal amount of all loans made by a school of nursing under this part minus the total principal amount of loans made by such school to students who are—
**(i)** enrolled in a full-time or half-time course of study at such school; or
**(ii)** in their grace period.
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**Source Credit**: (July 1, 1944, ch. 373, title VIII, § 835, formerly § 822, as added Pub. L. 88–581, § 2, Sept. 4, 1964, 78 Stat. 913; amended Pub. L. 90–490, title II, § 222(a), (c)(2), Aug. 16, 1968, 82 Stat. 783, 784; Pub. L. 92–158, § 6(d)(3), (e), Nov. 18, 1971, 85 Stat. 478; Pub. L. 93–385, § 3(b), Aug. 23, 1974, 88 Stat. 741; renumbered § 835 and amended Pub. L. 94–63, title IX, §§ 936(a), 941(h)(1)–(3), (i)(1), (2), July 29, 1975, 89 Stat. 362, 365, 366; Pub. L. 96–76, title I, § 109(a), Sept. 29, 1979, 93 Stat. 579; Pub. L. 97–35, title XXVII, § 2757(a), Aug. 13, 1981, 95 Stat. 931; Pub. L. 99–92, § 8(a), Aug. 16, 1985, 99 Stat. 397; Pub. L. 99–129, title II, § 209(j)(2), Oct. 22, 1985, 99 Stat. 536; Pub. L. 100–607, title VII, § 713(a), Nov. 4, 1988, 102 Stat. 3160; Pub. L. 111–148, title V, § 5310(b)(2), (6), Mar. 23, 2010, 124 Stat. 631.)
## Editorial Notes
### Amendments
2010—Subsec. (a). , substituted “this part” for “this subpart”.
Subsec. (b). , substituted “298d” for “297h” in pars. (2) and (3).
Subsec. (c). , substituted “this part” for “this subpart” wherever appearing.
1988—Subsec. (c)(1). inserted provisions relating to reimbursement of student loan fund for certain uncollectable loans.
1985—Subsec. (c). added subsec. (c).
Subsec. (c)(3)(C). , substituted provisions defining “grace period” as the period of nine months beginning on the date on which the borrower ceases to pursue a full-time or half-time course of study at a school of nursing for former provisions defining “grace period” as the period of one year beginning on (i) the date on which the borrower ceased to pursue a full-time or half-time course of study at a school of nursing; or (ii) the date on which ended any period described in clause (A) or (B) of which was applicable to such borrower, whichever was later.
Subsec. (c)(3)(D)(ii). , struck out “first” before “grace period.”
1981—Subsec. (b)(4). struck out provisions respecting prohibition on loans to students attending school before .
1979—Subsec. (b)(4). substituted “1980” for “1978”.
1975—Subsec. (a). , (2), substituted “subpart” for “part” and struck out “of Health, Education, and Welfare” after “Secretary”.
Subsec. (b). , §§ 936(a), 941(h)(3), (i)(2), in cl. (2) substituted “from allotments under ” for “under this part”, in cl. (4) substituted “” for “”, and in cls. (2) and (3) substituted references to sections 836 and 841 of the Act for references to sections 823 and 829, which had previously been translated as sections 297b and 297h of this title, respectively, requiring no further translations in the text as a result of the renumbering of the Public Health Service Act.
1974—Subsec. (b)(4). substituted “1975” for “1974”.
1971—Subsec. (b)(4). substituted “full-time or half-time course of study” for “full-time course of study” and “1974” for “1971”.
1968—Subsec. (b)(2). , (c)(2), inserted “, except as provided in ,” after “fund” where first appearing and added cl. (D) and redesignated former cl. (D) as (E), respectively.
Subsec. (b)(3). , inserted “, except as provided in ” after “fund” where first appearing and authorized the cancellation of an additional 50 per centum of a nursery student loan.
Subsec. (b)(4). , substituted “1971” for “1969”.
## Statutory Notes and Related Subsidiaries
### Effective Date of 1985 Amendments
Amendment by effective , see , set out as a note under section 254 of this title.
> **“(a)** Except as provided in subsection (b), this Act [enacting section 297i of this title, transferring section 296c to section 298b–5 of this title, amending this section, sections 296k, 296*l*, 296m, 297, 297–1, 297b, 297d, 297e, 298, 298b, and 298b–5 of this title, sections 1332, 1333, 1336, and 1341 of Title 15, Commerce and Trade, and section 6103 of Title 26, Internal Revenue Code, repealing sections 296 to 296b, 296d to 296f, 296j, 297h, and 297j of this title, and enacting provisions set out as notes under sections 201 and 298b–5 of this title and section 1333 of Title 15] and the amendments and repeals made by this Act shall take effect on October 1, 1985.
>
> **“(b)**
>
> **(1)** The provisions of section 9(c) of this Act [transferring section 296c of this title to section 298b–5 of this title, amending section 298b–5 of this title, and enacting provisions set out as notes under section 298b–5 of this title] and the amendment made by paragraph (1) of such section shall take effect on the date of enactment of this Act [Aug. 16, 1985].
>
> **“(2)** The amendment made by section 8(a) of this Act [amending section 297a of this title] shall take effect June 30, 1984.”
, , , provided that:
### Effective Date of 1975 Amendment
> “Except as may otherwise be specifically provided, the amendments made by this part [part B (§§ 905–937) of title IX of
>
> , enacting sections 296j to 296m of this title, amending sections 296, 296a, 296d, 296e, 297 to 297c, 297e, and 297j of this title, repealing sections 296d, 296g, 296i, 297f, and 298c–7 of this title, and enacting provisions set out as notes under sections 296, 296a, 296d, 296e, 296m, 297, 297b, and 297f of this title] shall take effect
>
> . The amendments made by this part to provisions of title VIII of the Public Health Service Act [
>
> et seq.] (hereinafter in this part referred to as the ‘Act’) are made to such provisions as amended by part A of this title [amending sections 296, 296d, 296e, 296g, 296i, 297j, and 298c–7 of this title].”
, , , provided that:
> “The amendments made by section 941 [enacting
>
> , amending sections 296a to 296d, 296f, 297a to 297e, 297g to 297k, 298, and 298b of this title, and repealing
>
> ] shall take effect
>
> . Except as otherwise specifically provided, the amendments made by section 941 to provisions of title VIII of the Act [
>
> et seq.] are made to such provisions as in effect
>
> , and as amended by part B of this title [see note set out above].”
, , , provided that:
### Effective Date of 1968 Amendment
Amendment by applicable with respect to loans made after , see , set out as a note under .