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OK back at'cha: This is from the Higher Education Act (Title 20, U.S. Code). There is actually a whole section on what the lender must provide in the loan in order for the government to insure it.

This is the whole damn section. I'm putting it here cause for those who really like to read.

There are two parts of this that might be relevant to the graduate-deferment issue, and I have bold and italicized them.


<<Sec. 1077. Eligibility of student borrowers and terms of federally insured student loans

(a) List of requirements
Except as provided in section 1078-3 of this title, a loan by an eligible lender shall be insurable by the Secretary under the provisions of this part only if -
(1) made to a student who (A) is an eligible student under
section 1091 of this title, (B) has agreed to notify promptly the
holder of the loan concerning any change of address, and (C) is
carrying at least one-half the normal full-time academic workload
for the course of study the student is pursuing (as determined by
the institution); and
(2) evidenced by a note or other written agreement which -
(A) is made without security and without endorsement;
(B) provides for repayment (except as provided in subsection
(c) of this section) of the principal amount of the loan in
installments over a period of not less than 5 years (unless
sooner repaid or unless the student, during the 6 months
preceding the start of the repayment period, specifically
requests that repayment be made over a shorter period) nor more
than 10 years beginning 6 months after the month in which the
student ceases to carry at an eligible institution at least
one-half the normal full-time academic workload as determined
by the institution,
except -
(i) as provided in subparagraph (C);
(ii) that the note or other written instrument may contain
such reasonable provisions relating to repayment in the event
of default in the payment of interest or in the payment of
the cost of insurance premiums, or other default by the
borrower, as may be authorized by regulations of the
Secretary in effect at the time the loan is made; and
(iii) that the lender and the student, after the student
ceases to carry at an eligible institution at least one-half
the normal full-time academic workload as determined by the
institution, may agree to a repayment schedule which begins
earlier, or is of shorter duration, than required by this
subparagraph, but in the event a borrower has requested and
obtained a repayment period of less than 5 years, the
borrower may at any time prior to the total repayment of the
loan, have the repayment period extended so that the total
repayment period is not less than 5 years;
(C) provides that periodic installments of principal need not
be paid, but interest shall accrue and be paid, during any
period -
(i) during which the borrower -
(I) is pursuing at least a half-time course of study as
determined by an eligible institution; or
(II) is pursuing a course of study pursuant to a graduate
fellowship program approved by the Secretary, or pursuant
to a rehabilitation training program for individuals with
disabilities approved by the Secretary,
except that no borrower shall be eligible for a deferment
under this clause, or a loan made under this part (other than
a loan made under section 1078-2 or 1078-3 of this title),
while serving in a medical internship or residency program;

(ii) not in excess of 3 years during which the borrower is
seeking and unable to find full-time employment; or
(iii) not in excess of 3 years for any reason which the
lender determines, in accordance with regulations prescribed
by the Secretary under section 1085(o) of this title, has
caused or will cause the borrower to have an economic
hardship;
and provides that any such period shall not be included in
determining the 10-year period described in subparagraph (B);
(D) provides for interest on the unpaid principal balance of
the loan at a yearly rate, not exceeding the applicable maximum
rate prescribed in section 1077a of this title, which interest
shall be payable in installments over the period of the loan
except that, if provided in the note or other written
agreement, any interest payable by the student may be deferred
until not later than the date upon which repayment of the first
installment of principal falls due, in which case interest
accrued during that period may be added on that date to the
principal;
(E) provides that the lender will not collect or attempt to
collect from the borrower any portion of the interest on the
note which is payable by the Secretary under this part, and
that the lender will enter into such agreements with the
Secretary as may be necessary for the purpose of section 1087
of this title;
(F) entitles the student borrower to accelerate without
penalty repayment of the whole or any part of the loan;
(G)
(i) contains a notice of the system, [1] of
disclosure of information concerning such loan to credit bureau
organizations under section 1080a of this title, and (ii)
provides that the lender on request of the borrower will
provide information on the repayment status of the note to such
organizations;
[1] So in original. The comma probably should not appear.
(H) provides that, no more than 6 months prior to the date on
which the borrower's first payment on a loan is due, the lender
shall offer the borrower the option of repaying the loan in
accordance with a graduated or income-sensitive repayment
schedule established by the lender and in accordance with the
regulations of the Secretary; and
(I) contains such other terms and conditions, consistent with
the provisions of this part and with the regulations issued by
the Secretary pursuant to this part, as may be agreed upon by
the parties to such loan, including, if agreed upon, a
provision requiring the borrower to pay the lender, in addition
to principal and interest, amounts equal to the insurance
premiums payable by the lender to the Secretary with respect to
such loan;
(3) the funds borrowed by a student are disbursed to the
institution by check or other means that is payable to and
requires the endorsement or other certification by such student,
except -
(A) that nothing in this subchapter and part C of subchapter
I of chapter 34 of title 42 shall be interpreted -
(i) to allow the Secretary to require checks to be made
copayable to the institution and the borrower; or
(ii) to prohibit the disbursement of loan proceeds by means
other than by check; and
(B) in the case of any student who is studying outside the
United States in a program of study abroad that is approved for
credit by the home institution at which such student is
enrolled, the funds shall, at the request of the borrower, be
delivered directly to the student and the checks may be
endorsed, and fund transfers authorized, pursuant to an
authorized power-of-attorney; and
(4) the funds borrowed by a student are disbursed in accordance
with section 1078-7 of this title.
(b) Special rules for multiple disbursement
For the purpose of subsection (a)(4) of this section -
(1) all loans issued for the same period of enrollment shall be
considered as a single loan; and
(2) the requirements of such subsection shall not apply in the
case of a loan made under section 1078-2 or 1078-3 of this title,
or made to a student to cover the cost of attendance at an
eligible institution outside the United States.
(c) Special repayment rules
Except as provided in subsection (a)(2)(H) of this section, the total of the payments by a borrower during any year of any repayment period with respect to the aggregate amount of all loans to that borrower which are insured under this part shall not, unless the borrower and the lender otherwise agree, be less than $600 or the balance of all such loans (together with interest thereon), whichever amount is less (but in no instance less than the amount of interest due and payable).
(d) Borrower information
The lender shall obtain the borrower's driver's license number, if any, at the time of application for the loan.>>
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