20 U.S.C. § 1072b — Agency Operating Fund

Page 403 TITLE 20—EDUCATION § 1072b 1 See References in Text note below. Editorial Notes REFERENCES IN TEXT Section 1078(c)(6)(A) of this title, referred to in sub- sec. (c)(2)(A), was redesignated section 1078(c)(6)(A)(i) of this title by Pub. L. 109–171, title VIII, § 8014(d)(3)(A), (B), Feb. 8, 2006, 120 Stat. 170. AMENDMENTS 2008—Subsec. (d)(1). Pub. L. 110–315 substituted ‘‘and 1087’’ for ‘‘1087, and 1087–2(q)’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective Oct. 1, 1998, except as otherwise pro- vided in Pub. L. 105–244, see section 3 of Pub. L. 105–244, set out as an Effective Date of 1998 Amendment note under section 1001 of this title. § 1072b. Agency Operating Fund (a) Establishment Each guaranty agency shall, not later than 60 days after October 7, 1998, establish a fund des- ignated as the Operating Fund. (b) Investment of funds Funds deposited into the Operating Fund shall be invested at the discretion of the guaranty agency in accordance with prudent investor standards. (c) Additional deposits After the establishment of the Operating Fund, the guaranty agency shall deposit into the Operating Fund— (1) the loan processing and issuance fee paid by the Secretary pursuant to section 1078(f) of this title; (2) 30 percent of amounts received after Oc- tober 7, 1998, from the Secretary as payment for administrative cost allowances for loans upon which insurance was issued prior to Oc- tober 7, 1998; (3) the account maintenance fee paid by the Secretary in accordance with section 1087h of this title; (4) the default aversion fee paid in accord- ance with section 1078(l) of this title; (5) amounts remaining pursuant to section 1078(c)(6)(B) 1 of this title from collection on defaulted loans held by the agency, after pay- ment of the Secretary’s equitable share, ex- cluding amounts deposited in the Federal Fund pursuant to section 1072a(c)(2) of this title; and (6) other receipts as specified in regulations of the Secretary. (d) Uses of funds (1) In general Funds in the Operating Fund shall be used for application processing, loan disbursement, enrollment and repayment status manage- ment, default aversion activities (including those described in section 1072(h)(8) of this title), default collection activities, school and lender training, financial aid awareness and related outreach activities, compliance moni- toring, and other student financial aid related activities, as selected by the guaranty agency. (2) Special rule The guaranty agency may, in the agency’s discretion, transfer funds from the Operating Fund to the Federal Fund for use pursuant to section 1072a of this title. Such transfer shall be irrevocable, and any funds so transferred shall become the sole property of the United States. (3) Definitions For purposes of this subsection: (A) Default collection activities The term ‘‘default collection activities’’ means activities of a guaranty agency that are directly related to the collection of the loan on which a default claim has been paid to the participating lender, including the due diligence activities required pursuant to regulations of the Secretary. (B) Default aversion activities The term ‘‘default aversion activities’’ means activities of a guaranty agency that are directly related to providing collection assistance to the lender on a delinquent loan, prior to the loan’s being legally in a default status, including due diligence ac- tivities required pursuant to regulations of the Secretary. (C) Enrollment and repayment status man- agement The term ‘‘enrollment and repayment sta- tus management’’ means activities of a guaranty agency that are directly related to ascertaining the student’s enrollment sta- tus, including prompt notification to the lender of such status, an audit of the note or written agreement to determine if the provi- sions of that note or agreement are con- sistent with the records of the guaranty agency as to the principal amount of the loan guaranteed, and an examination of the note or agreement to assure that the repay- ment provisions are consistent with the pro- visions of this part. (e) Ownership and regulation of Operating Fund (1) Ownership The Operating Fund, with the exception of funds transferred from the Federal Fund in ac- cordance with section 1072a(f) of this title, shall be considered to be the property of the guaranty agency. (2) Regulation Except as provided in paragraph (3), the Sec- retary may not regulate the uses or expendi- ture of moneys in the Operating Fund, but the Secretary may require such necessary reports and audits as provided in section 1078(b)(2) of this title. (3) Exception Notwithstanding paragraphs (1) and (2), dur- ing any period in which funds are owed to the Federal Fund as a result of transfer under sec- tion 1072a(f) of this title— (A) moneys in the Operating Fund may only be used for expenses related to the stu- dent loan programs authorized under this part; and Page 404 TITLE 20—EDUCATION § 1073 (B) the Secretary may regulate the uses or expenditure of moneys in the Operating Fund. (Pub. L. 89–329, title IV, § 422B, as added Pub. L. 105–244, title IV, § 413(b), Oct. 7, 1998, 112 Stat. 1677.) Editorial Notes REFERENCES IN TEXT Section 1078(c)(6)(B) of this title, referred to in sub- sec. (c)(5), was redesignated section 1078(c)(6)(A)(ii) of this title by Pub. L. 109–171, title VIII, § 8014(d)(3)(A), (B), Feb. 8, 2006, 120 Stat. 170. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective Oct. 1, 1998, except as otherwise pro- vided in Pub. L. 105–244, see section 3 of Pub. L. 105–244, set out as an Effective Date of 1998 Amendment note under section 1001 of this title. § 1073. Effects of adequate non-Federal programs (a) Federal insurance barred to lenders with ac- cess to State or private insurance Except as provided in subsection (b), the Sec- retary shall not issue certificates of insurance under section 1079 of this title to lenders in a State if the Secretary determines that every eli- gible institution has reasonable access in that State to a State or private nonprofit student loan insurance program which is covered by an agreement under section 1078(b) of this title. (b) Exceptions The Secretary may issue certificates of insur- ance under section 1079 of this title to a lender in a State— (1) for insurance of a loan made to a student borrower who does not, by reason of the bor- rower’s residence, have access to loan insur- ance under the loan insurance program of such State (or under any private nonprofit loan in- surance program which has received an ad- vance under section 1072 of this title for the benefit of students in such State); (2) for insurance of all the loans made to stu- dent borrowers by a lender who satisfies the Secretary that, by reason of the residence of such borrowers, such lender will not have ac- cess to any single State or nonprofit private loan insurance program which will insure sub- stantially all of the loans such lender intends to make to such student borrowers; or (3) under such circumstances as may be ap- proved by the guaranty agency in such State, for the insurance of a loan to a borrower for whom such lender previously was issued such a certificate if the loan covered by such cer- tificate is not yet repaid. (Pub. L. 89–329, title IV, § 423, as added Pub. L. 99–498, title IV, § 402(a), Oct. 17, 1986, 100 Stat. 1358.) Editorial Notes PRIOR PROVISIONS A prior section 1073, Pub. L. 89–329, title IV, § 423, Nov. 8, 1965, 79 Stat. 1237; Pub. L. 90–575, title I, § 119(a), Oct. 16, 1968, 82 Stat. 1026; Pub. L. 94–482, title I, § 127(a), Oct. 12, 1976, 90 Stat. 2103; Pub. L. 95–43, § 1(a)(14), June 15, 1977, 91 Stat. 214; Pub. L. 96–374, title XIII, § 1391(a)(1), Oct. 3, 1980, 94 Stat. 1503, limited participation in Fed- eral loan insurance programs, prior to the general revi- sion of this part by Pub. L. 99–498. § 1074. Scope and duration of Federal loan insur- ance program (a) Limitations on amounts of loans covered by Federal insurance The total principal amount of new loans made and installments paid pursuant to lines of credit (as defined in section 1085 of this title) to stu- dents covered by Federal loan insurance under this part shall not exceed $2,000,000,000 for the period from July 1, 1976, to September 30, 1976, for each of the succeeding fiscal years ending prior to October 1, 2009, and for the period from October 1, 2009, to June 30, 2010, for loans first disbursed on or before June 30, 2010. (b) Apportionment of amounts The Secretary may, if he or she finds it nec- essary to do so in order to assure an equitable distribution of the benefits of this part, assign, within the maximum amounts specified in sub- section (a), Federal loan insurance quotas appli- cable to eligible lenders, or to States or areas, and may from time to time reassign unused por- tions of these quotas. (Pub. L. 89–329, title IV, § 424, as added Pub. L. 99–498, title IV, § 402(a), Oct. 17, 1986, 100 Stat. 1358; amended Pub. L. 102–325, title IV, § 411(b)(1), July 23, 1992, 106 Stat. 510; Pub. L. 105–33, title VI, § 6104(1), Aug. 5, 1997, 111 Stat. 652; Pub. L. 105–244, title IV, § 414, Oct. 7, 1998, 112 Stat. 1679; Pub. L. 109–171, title VIII, § 8004(b)(1), Feb. 8, 2006, 120 Stat. 158; Pub. L. 110–315, title IV, § 421, Aug. 14, 2008, 122 Stat. 3227; Pub. L. 111–152, title II, § 2202, Mar. 30, 2010, 124 Stat. 1074.) Editorial Notes PRIOR PROVISIONS A prior section 1074, Pub. L. 89–329, title IV, § 424, Nov. 8, 1965, 79 Stat. 1237; Pub. L. 90–460, § 1(a)(1), Aug. 3, 1968, 82 Stat. 634; Pub. L. 90–575, title I, § 112(a), Oct. 16, 1968, 82 Stat. 1020; Pub. L. 92–318, title I, § 132(a), June 23, 1972, 86 Stat. 261; Pub. L. 94–328, § 2(a), June 30, 1976, 90 Stat. 727; Pub. L. 94–482, title I, § 127(a), Oct. 12, 1976, 90 Stat. 2103; Pub. L. 96–374, title IV, § 411(a), title XIII, § 1391(a)(1), Oct. 3, 1980, 94 Stat. 1415, 1503; Pub. L. 99–272, title XVI, § 16018(a)(1), Apr. 7, 1986, 100 Stat. 348, related to new loans under Federal loan insurance program, prior to the general revision of this part by Pub. L. 99–498. AMENDMENTS 2010—Subsec. (a). Pub. L. 111–152 substituted ‘‘Sep- tember 30, 1976, for each of the succeeding fiscal years ending prior to October 1, 2009, and for the period from October 1, 2009, to June 30, 2010, for loans first disbursed on or before June 30, 2010.’’ for ‘‘September 30, 1976, and for each of the succeeding fiscal years ending prior to October 1, 2014. Thereafter, Federal loan insurance pur- suant to this part may be granted only for loans made (or for loan installments paid pursuant to lines of cred- it) to enable students, who have obtained prior loans insured under this part, to continue or complete their educational program; but no insurance may be granted for any loan made or installment paid after September 30, 2018.’’ 2008—Subsec. (a). Pub. L. 110–315 substituted ‘‘October 1, 2014’’ for ‘‘October 1, 2012’’ and ‘‘September 30, 2018’’ for ‘‘September 30, 2016’’.