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PUBLIC LAW 103-66—AUG. 10, 1993 107 STAT. 361 (1) in subsection (a) by amending paragraph (SKA) to read as follows: "(3) DEFINITION OF EUGIBLE BORROWERS.—(A) For the pur- pose of this section, the term 'eligible borrower* means a bor- rower who, at the time of application for a consolidation loan is in repajnnent status, or in a grace period preceding repay- ment, or is a delinquent or defaulted borrower who will reenter repajnnent through loan consolidation.**; (2) in subsection (b)— (A) in paragraph (1)— (i) in subparagraph (AXii), by inserting "with income-sensitive repayment terms" after ''obtain a consolidation loan"; (ii) by redesignating subparagraph (E) as subpara- graph (F); and (iii) by inserting after subparagraph (D) the follow- ing new subparagraph: "(E) that the lender shall offer an income-sensitive Regulations. repa3mient schedule, established by the lender in accord- ance with the regulations promulgated by the Secretary, to the borrower of any consolidation loan made by the lender on or after July 1,1994; and"; (B) in paragraph (4), by amending subparagraph (C) to read as follows: "(CXi) provides that periodic installments of principal need not bie paid, but interest shall accrue and be paid in accordance with clause (ii), during any period for which the borrower would be eligible for a deferral under section 428(bXl)(M), and that any such period shall not be included in determining the repayment schedule pursuant to sub- section (cX2) of this section; and "(ii) provides that interest shall accrue and be paid— "(I) by the Secretary, in the case of a consolidation loan that consolidated only Federal Stafford Loans for which the student borrower received an interest sub- sidy under section 428; or "(II) by the borrower, or capitalized, in the case of a consolidation loan other than a loan described in subclause (I);"; smd (C) by adding at the end the following new paragraph: "(5) DIRECT LOANS.—In the event that a borrower is unable to obtain a consolidation loan from a lender with an agreement under subsection (aXD, or is unable to obtain a consolidation loan with income-sensitive repayment terms acceptable to the borrower from such a lender, the Secretary shall offer any such borrower who applies for it, a direct consolidation loan. Such direct consolidation loan shall, as requested by the bor- rower, be repaid either pursuant to income contingent repay- ment under part D of this title or pursuant to any other repayment provision under this section. The Secretary shall not offer such loans if, in the Secretary's judgment, the Depart- ment of Education does not have the necessary origination and servicing arrangements in place for such loans."; and (3) in subsection (c)— (A) in paragraph (1), by amending subparagraphs (B) and (C) to read as follows: