Middle Income Educational Opportunity Act of 1991

Middle Income Educational Opportunity Act of 1991 - Amends the Higher Education Act of 1965 (HEA) to establish a Federal Direct Loans program consolidating current student loan programs. (Eliminates the current part D, Income Contingent Direct Loans Demonstration Project.)

Directs the Secretary of Education (the Secretary) to carry out a direct loan program (the program) for qualified students at institutions of higher education during the period beginning on July 1, 1994.

Directs the Secretary to make program payments for any fiscal year to: (1) each institution of higher education having a program agreement; and (2) the designated lending agent if such an institution designates one. Requires such payments to be made on the basis of the estimated needs of the institution's students, considering their demand and eligibility for subsidized and unsubsidized direct loans under the program.

Sets forth program payment rules, in general and for initial payments.

Declares that an institution with an approved application and agreement with the Secretary shall be deemed to have a contractual obligation (entitlement) from the United States for making the program payments specified in that application.

Sets forth requirements for such applications of and agreements with institutions of higher education. Provides for allowing institutions to designate lending agents to receive advances of program payments. Sets forth types of entities eligible to be designated lending agents.

Entitles an institution to a payment for each fiscal year during which it makes student loans under such an agreement in lieu of reimbursement for its expenses in administering its student loan program during such year. Sets forth formulas for determining such payments. Requires each institution to use such payments first to carry out specified HEA provisions relating to administrative expenses and then for such additional administrative costs as that institution determines necessary. Deems an institution with such program agreement to have a contractual right to such payments.

Provides for student eligibility for, and the amount of, subsidized and unsubsidized loans under the program.

Limits program eligibility, among other criteria, to qualified students carrying at least one-half the normal academic workload and maintaining good standing.

Allows subsidized loans under the program to be made only to students who meet the basic requirements but also demonstrate financial need for such a loan.

Makes qualified graduate and professional students and qualified undergraduate independent students eligible to borrow unsubsidized loans under the program in specified amounts.

Makes qualified undergraduate dependent students eligible for unsubsidized loans under the program, if the financial aid administrator determines after review that exceptional circumstances will likely preclude the student's parents from borrowing under the program. Prohibits students from being eligible to borrow unsubsidized loans under the program until they have obtained a high school diploma or equivalent.

Declares that, if an institution's cohort default rate is 30 percent or more for the most recent fiscal year for which data is available, no undergraduate student at that institution may borrow unsubsidized loans under the program. Directs the Secretary to afford any such institution an opportunity to present evidence contesting the accuracy of the calculation of such rate.

Makes parents of qualified dependent students eligible to borrow unsubsidized loans under the program in any amount, subject to specified restrictions based on cost of attendance and amount of other unsubsidized loans and student aid.

Provides for determining subsidized loan amounts, based on cost of attendance, other types of student aid received, and expected family (or independent student self-help) contribution. Sets annual and aggregate limits for subsidized loans to first-year, undergraduate, and graduate or professional students.

Provides for determining unsubsidized loans to students or parents, based on cost of attendance and other types of student aid. Sets forth annual and aggregate limits for unsubsidized loans for first-year, undergraduate, and graduate or professional students.

Sets forth terms of loans under the program. Provides for deferments of repayment during specified periods of education or service. Allows borrowers to accelerate without penalty repayment of the whole or any part of the loan.

Sets forth additional and separate terms for subsidized loans and for unsubsidized loans under the program.

Sets forth requirements for multiple disbursement of student loans.

Sets forth loan repayment rules, including minimum repayment amounts. Requires if a borrower so requests, that repayment be made in accordance with a graduated or income contingent schedule established by the Secretary. Allows the Secretary and the borrower to agree to increase the specified repayment period, but prohibits it from extending beyond 20 years. Directs the Secretary to notify the student borrower, at the beginning of the repayment period, of the availability of the flexible repayment program.

Provides for interest rates on unsubsidized loans (the bonds equivalent rate of 52-week Treasury bills, plus three and one-quarter percent) and subsidized loans (eight percent). Directs the Secretary to report such interest rates to the Congress for any fiscal year in which they are not sufficient to recover specified costs to the Government.

Sets forth requirements for consolidation loans. Directs the Secretary to enter into agreements to provide loans to consolidate eligible student loans whose outstanding indebtedness is at least $5,000. Sets forth terms and conditions of consolidation loans, including annual interest rates of at least eight percent. Directs the Secretary to establish repayment terms, including graduated and income contingent repayment schedules.

Provides for administration of the program. Requires the Secretary to establish: (1) a central data system to maintain records on all loans made under the program; and (2) default prevention programs.

Provides for funding of the program through the sale of Government obligations. Sets forth the duties of the Secretary and the Secretary of the Treasury with respect to such sale and funding.

Sets forth various amendments to phase out the Stafford Student Loan Program by June 30, 1994. Sets forth adjustments in loan limits prior to termination for the following components of the Stafford program: (1) the federally-insured student loan (FISL) program; (2) the guaranteed student loan (GSL) program; (3) the supplemental loans for students (SLS) program; and (4) loans to parents (PLUS) program.

Revises the administrative cost allowance for guaranty agencies under the Stafford program.

Provides for expanded uses of Perkins direct student loans repayments. Allows the institution to transfer any part or all of the collections of principal and interest on student loans made from deposited funds in its Perkins student loan fund to an endowment fund: (1) invested and operated in accordance with regulations prescribed by the Secretary; and (2) all of the income from which is expended to make additional funds available to its students under the Pell grants, supplemental educational opportunity grants, and work-study student and programs. Authorizes appropriations.