§ 1072. Advances for reserve funds of State and nonprofit private loan insurance programs

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1986

   Higher Education Act of 1965

   Pub. L. 89–329 title IV § 422 · 79 Stat. 1219

   Enacted · 20 U.S.C. § 1072

   Pub. L. 89–329, title IV, § 422, as added Pub. L. 99–498, title IV, § 402(a), Oct. 17, 1986, 100 Stat. 1354

   Source evidence

   Code source credit
   Pub. L. 89–329, title IV, § 422, as added Pub. L. 99–498, title IV, § 402(a), Oct. 17, 1986, 100 Stat. 1354

   Enacted provision · exact public law section
   Sec. 422. advances for reserve funds of state and nonprofit private loan insurance programs (a) (1) From the sums appropriated pursuant to clause (3) of section 421 (b), the Commissioner is authorized to make advances to any State with which he has made an agreement pursuant to section 428(b) for the purpose of helping to establish or strengthen the reserve fund of the student loan insurance program covered by that agreement. If for any of the fiscal years ending June 30, 1966, June 30, 1967, or June 30, 1968, a State does not have a student loan insurance program covered by an agreement made pursuant to section 428(b), and the Commissioner determines after consultation with the chief executive officer of that State that there is no reasonable likelihood that the State will have such a student loan insurance program for such year, the Commissioner may make advances for such year for the same purpose to one or more nonprofit private institutions or organizations with which he has made an agreement pursuant to section 428(b) in order to enable students in that State to participate in a program of student loan insurance covered by such an agreement. The Commissioner may make advances under this subsection both to a State program (with which he has such an agreement) and to one or more nonprofit private institutions or organizations (with which he has such an agreement) in that State if he determines that such advances are necessary in order that students in each eligible institution have access through such institution to a student loan insurance program which meets the requirements of section 428(b) (1). (2) Advances pursuant to this subsection shall be upon such terms and conditions (including conditions relating to the time or times of payment) consistent with the requirements of section 428(b) as the Commissioner determines will best carry out the purposes of this section. Advances made by the Commissioner under this subsection shall be repaid within such period as the Commissioner may deem to be appropriate in each case m the light of the maturity and solvency of the reserve fund for which the advance was made. (b) The total of the advances to any State pursuant to subsection (a) may not exceed an amount which bears the same ratio to 2 1/2 per centum of $700,000,000 as the population of that State aged eighteen to twenty-two, inclusive, bears to the total population of all the States aged eighteen to twenty-two, inclusive. If the amount so determined for any State, however, is less than $25,000, it shall be increased to $25,000 and the total of the increases thereby required shall be derived by proportionately reducing (but not below $25,000) the amount, so determined for each of the remaining States. Advances to nonprofit private institutions and organizations pursuant to subsection (a) may be in such amounts as the Commissioner determines will best achieve the purposes for which they are made, except that the sum of (1) advances to such institutions and organizations for the benefit of students in any State plus (2) the amounts advanced to such State, may not exceed the maximum amount which may be advanced to that State pursuant to the first two sentences of this subsection. For the purposes of this subsection, the population aged eighteen to twenty-two, inclusive, of each State and of all the States shall be determined by the Commissioner on the basis of the most recent satisfactory data available to him.

2. 1987

   Pub. L. 100–203 § 3002(a) · 101 Stat. 1330

   Struck · 20 U.S.C. § 1072(e)

   Pub. L. 100–203, § 3002(a), struck out subsec. (e) which related to reduction of excess cash reserves

   Source evidence

   Code amendment note
   Subsec. (e). Pub. L. 100–203, § 3002(a), struck out subsec. (e) which related to reduction of excess cash reserves.

   Enacted provision · exact public law section
   (a) In General.— Subsection (e) of section 422 of the Higher Education Act of 1965 (20 U.S.C. 1072) is repealed on September 30, 1989.

3. 1987

   Pub. L. 100–203 § 3001(a) · 101 Stat. 1330

   Added · 20 U.S.C. § 1072(e)

   Pub. L. 100–203, § 3001(a), added subsec. (e)

   Target inherited from the preceding amendment note.

   Source evidence

   Code amendment note
   Pub. L. 100–203, § 3001(a), added subsec. (e).

   Enacted provision · exact public law section
   (a) In General.— Section 422 of the Higher Education Act of 1965 (2() U.S.C. 1072) is amended by adding at the end thereof the following new subsection: “(e) Reduction of Excess Cash Reserves.— “(1) Limitation on maximum cash reserves.— A guaranty agency shall not accumulate cash reserves in excess of the greater of— “(A) 40 percent of the total amount paid by that agency on insurance claims during the preceding fiscal year; “(B) 0.3 percent of original principal amount of loans that are insured by that agency and that are outstanding at the end of such preceding fiscal year; “(C) an amount which, when combined with all other parts of total agency reserves, equals 0.4 percent of such original principal amount; “(D) $500,000; or “(E) the amount required to comply with the reserve requirements of a State law as in effect on October 17, 1986. “(2) Recovery of excess cash reserves.— The Secretary shall, not later than March 31, 1988, determine for each guaranty agency the maximum cash reserve permitted under paragraph (1) for fiscal year 1986. Subject to paragraphs (3) and (4), if the Secretary determines that any guaranty agency had, at the end of fiscal year 1986, a cash reserve that exceeded such maximum, the Secretary shall direct the agency to eliminate such excess by any one or more of the following methods, as selected by the guaranty agency: “(A) by repaying any advances to such agency made by the Secretary under this section that are not required to be repaid under subsection (d); “(B) by withholding and canceling claims for reimbursement otherwise payable under section 428(c)(1); “(C) by reducing the amount of payments for which application will be made by such agency under section 428(f); or “(D) by any other method of reducing payments from or increasing payments to the Federal Government, including payment of additional reinsurance fees in addition to the fees required by section 428(c)(9), as proposed by the agency and agreed to by the Secretary. “(3) Appeals based on special circumstances.— (A) If the Secretary determines, on the basis of an application from a guaranty agency, that— “(i) the agency’s financial position has deteriorated significantly since the end of the preceding fiscal year; “(ii) significant changes in the economic circumstances (such as a change in agency current cash reserves) or the loan insurance program render the limitations of paragraph (1) inadequate for the continued functioning of the agency; or “(iii) in recovering funds as required by this subsection, a guaranty agency would be compelled to violate contractual obligations existing on the date of enactment of this subsection that require a specified level of reserve funds to be maintained by such agency; the Secretary may waive, in whole or in part, the imposition of the remedies required by paragraph (2) for such agency. “(B) The Secretary shall respond to request for waivers from guaranty agencies in an expedited manner and, except for unusual circumstances or with the consent of the guaranty agency, shall resolve such request within 6 weeks of submission. “(4) Recovery limits.— The Secretary shall not require a total reduction of cash reserves for all guaranty agencies in excess of $250,000,000 during fiscal year 1988. If the total of cash reserves of all guaranty agencies exceeds the maximum amounts permitted under paragraph (1) by more than $250,000,000, the Secretary shall ratably reduce the amounts that guaranty agencies are directed to eliminate under paragraph (2), so that the total excess cash reserves to be eliminated equals $250,000,000. “(5) Definitions.— As used in this subsection— “(A) the ‘cash reserves’ for any guaranty agency for any fiscal year are equal to the agency’s cumulative cash receipts less the agency’s cumulative cash disbursements at the end of such fiscal year; “(B) the ‘total reserves’ for any guaranty agency for any fiscal year are equal to the agency’s cash reserves plus the agency’s cumulative accounts receivable less the agency’s accounts payable, as of the end of such fiscal year; “(C) the term ‘cumulative cash receipts’ includes such receipts as insurance premiums. Federal reinsurance payments, and collections on defaulted loans; “(D) the term ‘cumulative cash disbursements’ includes such disbursements as payments for default claims, repayment of Federal advances, transfers to other State activities, and payment of collection costs and other operating costs; “(E) the term ‘accounts receivable’ includes Federal reinsurance payments and administrative cost allowances owed but not yet paid to the guaranty agency, as of the end of a fiscal year; and “(F) the term ‘accounts payable’ includes collections and reinsurance fees due (but not paid) to the Department of Education, as of the end of a fiscal year.”.

4. 1992

   Higher Education Amendments of 1992

   Pub. L. 102–325 § 412(1) · 106 Stat. 448

   Inserted · 20 U.S.C. § 1072(a)(2)

   Pub. L. 102–325, § 412(1), inserted at end “Except as provided in section 1078(c)(10)(E) or (F) of this title, such unencumbered non-Federal portion shall not be subject to recall, repayment, or recovery by the Secretary.”

   Source evidence

   Code amendment note
   Subsec. (a)(2). Pub. L. 102–325, § 412(1), inserted at end “Except as provided in section 1078(c)(10)(E) or (F) of this title, such unencumbered non-Federal portion shall not be subject to recall, repayment, or recovery by the Secretary.”

   Enacted provision · exact public law section
   (1) in subsection (a)(2), by adding at the end the following new sentence: “Except as provided in section 428(c)(10)(E) or (F), such unencumbered non-Federal portion shall not be subject to recall, repayment, or recovery by the Secretary.”; and

5. 1992

   Higher Education Amendments of 1992

   Pub. L. 102–325 § 416(p)(8) · 106 Stat. 448

   1. Substituted · 20 U.S.C. § 1072(c)(5); 20 U.S.C. § 1072(c)(7)

      Pub. L. 102–325, § 416(p)(8), substituted “Except as provided in paragraph (7), advances” for “Advances” in par. (5)

   2. Added · 20 U.S.C. § 1072(c)(5); 20 U.S.C. § 1072(c)(7)

      Pub. L. 102–325, § 416(p)(8), added par. (7)

   Source evidence

   Code amendment note
   Subsec. (c)(5), (7). Pub. L. 102–325, § 416(p)(8), substituted “Except as provided in paragraph (7), advances” for “Advances” in par. (5) and added par. (7).

   Enacted provision · exact public law section
   (8) Conforming amendments.— Section 422(c) of the Act (20 U.S.C. 1072(c)) is amended— (A) in paragraph (5), by striking “Advances pursuant to this subsection” in paragraph (5) and inserting “Except as provided in paragraph (7), advances pursuant to this subsection”; and (B) by inserting, after paragraph (6), the following new paragraph: “(7) Emergency advances.— The Secretary is authorized to make advances, on terms and conditions satisfactory to the Secretary, to a guaranty agency in accordance with section 428(c)(10)(F)(v) in order to assist the agency in meeting its immediate cash needs and ensure the uninterrupted payment of default claims by lenders.”.

6. 1992

   Higher Education Amendments of 1992

   Pub. L. 102–325 § 412(2) · 106 Stat. 448

   Added · 20 U.S.C. § 1072(e); 20 U.S.C. § 1072(f)

   Pub. L. 102–325, § 412(2), added subsecs. (e) and (f)

   Source evidence

   Code amendment note
   Subsecs. (e), (f). Pub. L. 102–325, § 412(2), added subsecs. (e) and (f).

   Enacted provision · exact public law section
   (2) by adding at the end thereof the following new subsections: “(e) Correction for Errors Under Reduction of Excess Cash Reserves.— “(1) In general.— The Secretary shall pay any guaranty agency the amount of reimbursement of claims under section 428(c)(1), filed between September 1, 1988, and December 31, 1989, which were previously withheld or canceled in order to be applied to satisfy such agency’s obligation to eliminate excess cash reserves held by such agency, based on the maximum cash reserve (as described in subsection (e) of this section as in effect on September 1, 1988) permitted at the end of 1986, if such maximum cash reserve was miscalculated because of erroneous financial information provided by such agency to the Secretary and if (A) such erroneous information is verified by an audited financial statement of the reserve fund, signed by a certified public accountant, and (B) such audited financial statement is provided to the Secretary prior to January 1, 1993. “(2) Amount.— The amount of reimbursement for claims shall be equal to the amount of reimbursement for claims withheld or canceled in order to be applied to such agency’s obligation to eliminate excess cash reserves which exceeds the amount of that which would have been withheld or canceled if the maximum excess cash reserves had been accurately calculated. “(f) Refund of Cash Reserve Payments.— The Secretary shall, within 30 days after the date of enactment of the Higher Education Amendments of 1992, pay the full amount of payments withheld or canceled under paragraph (3) of this subsection to any guaranty agency which— “(1) was required to eliminate excess cash reserves, based on the maximum cash reserve (as described in subsection (e) of this section as in effect on September 1, 1988) permitted at the end of 1986; “(2) appealed the Secretary’s demand that such agency should eliminate such excess cash reserves and received a waiver of a portion of the amount of such excess cash reserves to be eliminated; “(3) had payments under section 428(c)(1) or section 428(f) previously withheld or canceled in order to be applied to satisfy such agency’s obligation to eliminate excess cash reserves held by such agency, based on the maximum cash reserve (as described in subsection (e) of this section as in effect on September 1, 1988) permitted at the end of 1986; and “(4) according to a Department of Education review that was completed and forwarded to such guaranty agency prior to January 1, 1992, is expected to become insolvent during or before 1996 and the payments withheld or canceled under paragraph (3) of this subsection are a factor in such agency’s impending insolvency.”.

7. 1993

   Omnibus Budget Reconciliation Act of 1993

   Pub. L. 103–66 § 4041(a)(2)(A) · 107 Stat. 312

   Substituted · 20 U.S.C. § 1072(c)(7)

   Pub. L. 103–66, § 4041(a)(2)(A), substituted “to a guaranty agency—” and subpars. (A) and (B) for “to a guaranty agency in accordance with section 1078(c)(10)(F)(v) of this title in order to assist the agency in meeting its immediate cash needs and ensure the uninterrupted payment of default claims by lenders.”

   Source evidence

   Code amendment note
   Subsec. (c)(7). Pub. L. 103–66, § 4041(a)(2)(A), substituted “to a guaranty agency—” and subpars. (A) and (B) for “to a guaranty agency in accordance with section 1078(c)(10)(F)(v) of this title in order to assist the agency in meeting its immediate cash needs and ensure the uninterrupted payment of default claims by lenders.”

   Enacted provision · exact public law section
   (A) Advances to guarantee agencies.— Section 422(c)(7) of the Act (20 U.S.C. 1072(c)(7)) is amended by striking all beginning with “to a guaranty agency” through the period and inserting “to a guaranty agency— “(A) in accordance with section 428(j), in order to ensure that the guaranty agency shall make loans as the lender-of-last-resort during the transition from the Federal Family Education Loan Program under this part to the Federal Direct Student Loan Program under part D of this title; or “(B) if the Secretary is seeking to terminate the guaranty agency’s agreement, or assuming the guaranty agency’s functions, in accordance with section 428(c)(10)(F)(v), in order to assist the agency in meeting its immediate cash needs, ensure the uninterrupted payment of claims, or ensure that the guaranty agency shall make loans as described in subparagraph (A);”.

8. 1993

   Omnibus Budget Reconciliation Act of 1993

   Pub. L. 103–66 § 4042 · 107 Stat. 312

   Added · 20 U.S.C. § 1072(g)

   Pub. L. 103–66, § 4042, added subsec. (g)

   Source evidence

   Code amendment note
   Subsec. (g). Pub. L. 103–66, § 4042, added subsec. (g).

   Enacted provision · exact public law section
   SEC. 4042. GUARANTY AGENCY RESERVES. Section 422 of the Act (20 U.S.C. 1072) is amended by adding at the end the following new subsection: “(g) Preservation and Recovery of Guaranty Agency Reserves.— “(1) Authority to recover funds.— Notwithstanding any other provision of law, the reserve funds of the guaranty agencies, and any assets purchased with such reserve funds, regardless of who holds or controls the reserves or assets, shall be considered to be the property of the United States to be used in the operation of the program authorized by this part or the program authorized by part D of this title. However, the Secretary may not require the return of all reserve funds of a guaranty agency to the Secretary unless the Secretary determines that such return is in the best interest of the operation of the program authorized by this part or the program authorized by part D of this title, or to ensure the proper maintenance of such agency’s funds or assets or the orderly termination of the guaranty agency’s operations and the liquidation of its assets. The reserves shall be maintained by each guaranty agency to pay program expenses and contingent liabilities, as authorized Dy the Secretary, except that— “(A) the Secretary may direct a guaranty agency to return to the Secretary a portion of its reserve fund which the Secretary determines is unnecessary to pay the program expenses and contingent liabilities of the guaranty agency; “(B) the Secretary may direct the guaranty agency to require the return, to the guaranty agency or to the Secretary, of any reserve funds or assets held by, or under the control of, any other entity, which the Secretary determines are necessary to pay the program expenses and contingent liabilities of the guaranty agency, or which are required for the orderly termination of the guaranty agency’s operations and the liquidation of its assets; “(C) the Secretary may direct a guaranty agency, or such agency’s officers or directors, to cease any activities involving expenditure, use or transfer of the guaranty agency’s reserve funds or assets which the Secretary determines is a misapplication, misuse, or improper expenditure of such funds or assets; and “(D) any such determination under subparagraph (A) Regulations. or (B) shall be based on standards prescribed by regulations that are developed through negotiated rulemaking and that include procedures for administrative due process. “(2) Termination provisions in contracts.— (A) To ensure that the funds and assets of the guaranty agency are preserved, any contract with respect to the administration of a guaranty agency’s reserve funds, or the administration of any assets purchased or acquired with the reserve funds of the guaranty agency, that is entered into or extended by the guaranty agency, or any other party on behalf of or with the concurrence of the guaranty agency, after the date of enactment of this subsection shall provide that the contract is terminable by the Secretary upon 30 days notice to the contracting parties if the Secretary determines that such contract includes an impermissible transfer of the reserve funds or assets, or is otherwise inconsistent with the terms or purposes of this section. “(B) The Secretary may direct a guaranty agency to suspend or cease activities under any contract entered into by or on behalf of such agency after January 1, 1993, if the Secretary determines that the misuse or improper expenditure of such guaranty agency’s funds or assets or such contract provides unnecessary or improper benefits to such agency’s officers or directors. “(3) Penalties.— Violation of any direction issued by the Secretary under this subsection may be subject to the penalties described in section 490 of this Act. “(4) Availability of funds.— Any funds that are returned or otherwise recovered by the Secretary pursuant to this subsection shall be available for expenditure for expenses pursuant to section 458 of this Act.”.

9. 1993

   Higher Education Technical Amendments of 1993

   Pub. L. 103–208 § 2(c)(1) · 107 Stat. 2457

   Substituted · 20 U.S.C. § 1072(c)(7)(B)

   Pub. L. 103–208 substituted a period for semicolon at end. See Codification note above

   Source evidence

   Code amendment note
   Subsec. (c)(7)(B). Pub. L. 103–208 substituted a period for semicolon at end. See Codification note above.

   Enacted provision · exact public law section
   (1) 20 USC 1072. in section 422(c)(7), by striking the semicolon at the end of subparagraph (B) and inserting a period;

10. 1997

    Balanced Budget Act of 1997

    Pub. L. 105–33 title VI § 6101(a) · 111 Stat. 251

    Added · 20 U.S.C. § 1072(h)

    Pub. L. 105–33 added subsec. (h)

    Source evidence

    Code amendment note
    Subsec. (h). Pub. L. 105–33 added subsec. (h).

    Enacted provision · exact public law section
    (a) Amendment.— Section 422 of the Higher Education Act of 1965 (20 U.S.C. 1072) is amended by adding after subsection (g) the following new subsection: “(h) Recall of Reserves; Limitations on Use of Reserve Funds and Assets.— “(1) In general.— Notwithstanding any other provision of law, the Secretary shall, except as otherwise provided in this subsection, recall $1,000,000,000 from the reserve funds held by guaranty agencies on September 1, 2002. “(2) Deposit.— Funds recalled by the Secretary under this subsection shall be deposited in the Treasury. “(3) Required share.— The Secretary shall require each guaranty agency to return reserve funds under paragraph (1) based on the agency’s required share of recalled reserve funds held by guaranty agencies as of September 30, 1996. For purposes of this paragraph, a guaranty agency’s required share of recalled reserve funds shall be determined as follows: “(A) The Secretary shall compute each guaranty agency’s reserve ratio by dividing (i) the amount held in the agency’s reserve funds as of September 30, 1996 (but reflecting later accounting or auditing adjustments approved by the Secretary), by (ii) the original principal amount of all loans for which the agency has an outstanding insurance obligation as of such date, including amounts of outstanding loans transferred to the agency from another guaranty agency. “(B) If the reserve ratio of any guaranty agency as computed under subparagraph (A) exceeds 2.0 percent, the agency’s required share shall include so much of the amounts held in the agency’s reserve funds as exceed a reserve ratio of 2.0 percent. “(C) If any additional amount is required to be recalled under paragraph (1) (after deducting the total of the required shares calculated under subparagraph (B)), such additional amount shall be obtained by imposing on each guaranty agency an equal percentage reduction in the amount of the agency’s reserve funds remaining after deduction of the amount recalled under subparagraph (B), except that such percentage reduction under this subparagraph shall not result in the agency’s reserve ratio being reduced below 0.58 percent. The equal percentage reduction shall be the percentage obtained by dividing— “(i) the additional amount required to be recalled (after deducting the total of the required shares calculated under subparagraph (B)), by “(ii) the total amount of all such agencies’ reserve funds remaining (after deduction of the required shares calculated under such subparagraph). “(D) If any additional amount is required to be recalled under paragraph (1) (after deducting the total of the required shares calculated under subparagraphs (B) and (C)), such additional amount shall be obtained by imposing on each guaranty agency with a reserve ratio (after deducting the required snares calculated under such subparagraphs) in excess of 0.58 percent an equal percentage reduction in the amount of the agency’s reserve funds remaining (after such deduction) that exceed a reserve ratio of 0.58 percent. The equal percentage reduction shall be the percentage obtained by dividing— “(i) the additional amount to be recalled under paragraph (1) (after deducting the amount recalled under subparagraphs (B) and (C)), by “(ii) the total amount of all such agencies’ reserve funds remaining (after deduction of the required shares calculated under such subparagraphs) that exceed a reserve ratio of 0.58 percent. “(4) Restricted accounts required.— “(A) In general.— Within 90 days after the beginning of each of the fiscal years 1998 through 2002, each guaranty agency shall transfer a portion of the agency’s required share determined under paragraph (3) to a restricted account established by the agency that is of a type selected by the agency with the approval of the Secretary. Funds transferred to such restricted accounts shall be invested in obligations issued or guaranteed by the United States or in other similarly low-risk securities. “(B) Requirement.— A guaranty agency shall not use the funds in such a restricted account for any purpose without the express written permission of the Secretary, except that a guaranty agency may use the earnings from such restricted account for default reduction activities. “(C) Installments.— In each of fiscal years 1998 through 2002, each guaranty agency shall transfer the agency’s required share to such restricted account in 5 equal annual installments, except that— “(i) a guaranty agency that has a reserve ratio (as computed under subparagraph (3)(A)) equal to or less than 1.10 percent may transfer the agency’s required share to such account in 4 equal installments beginning in fiscal year 1999; and “(ii) a guaranty agency may transfer such required share to such account in accordance with such other payment schedules as are approved by the Secretary. “(5) Shortage.— If, on September 1, 2002, the total amount in the restricted accounts described in paragraph (4) is less than the amount the Secretary is required to recall under paragraph (1), the Secretary shall require the return of the amount of the shortage from other reserve funds held by guaranty agencies under procedures established by the Secretary. The Secretary shall first attempt to obtain the amount of such shortage from each guaranty agency that failed to transfer the agency’s required share to the agency’s restricted account in accordance with paragraph (4). “(6) Enforcement.— “(A) In general.— The Secretary may take such reasonable measures, and require such information, as may be necessary to ensure that guaranty agencies comply with the requirements of this subsection. “(B) Prohibition.— If the Secretary determines that a guaranty agency has failed to transfer to a restricted account any portion of the agency’s required share under this subsection, the agency may not receive any other funds under this part until the Secretary determines that the agency has so transferred the agency’s required share. “(C) Waiver.— The Secretary may waive the requirements of subparagraph (B) for a guaranty agency described in such subparagraph if the Secretary determines that there are extenuating circumstances beyond the control of the agency that justify such waiver. “(7) Limitation.— “(A) Restriction on other authority.— The Secretary shall not have any authority to direct a guaranty agency to return reserve funds under subsection (g)(1)(A) during the period from the date of enactment of the Balanced Budget Act of 1997 through September 30, 2002. “(B) Use of termination collections.— Any reserve funds directed by the Secretary to be returned to the Secretary under subsection (g)(1)(B) during such period that do not exceed a guaranty agency’s required share of recalled reserve funds under paragraph (3)— “(i) shall be used to satisfy the agency’s required share of recalled reserve funds; and “(ii) shall be deposited in the restricted account established by the agency under paragraph (4), without regard to whether such funds exceed the next installment required under such paragraph. “(C) Use of sanctions collections.— Any reserve funds directed by the Secretary to be returned to the Secretary under subsection (g)(1)(C) during such period that do not exceed a guaranty agency’s next installment under paragraph (4)— “(i) shall be used to satisfy the agency’s next installment; and “(ii) shall be deposited in the restricted account established by the agency under paragraph (4). “(D) Balance available to secretary.— Any reserve funds directed by the Secretary to be returned to the Secretary under subparagraph (B) or (C) of subsection (g)(1) that remain after satisfaction of the requirements of subparagraphs (B) and (C) of this paragraph shall be deposited in the Treasury. “(8) Definitions.— For the purposes of this subsection: “(A) Default reduction activities.— The term ‘default reduction activities’ means activities to reduce student loan defaults that improve, strengthen, and expand default prevention activities, such as— “(i) establishing a program of partial loan cancellation to reward disadvantaged borrowers for good repayment histories with their lenders; “(ii) establishing a financial and debt management counseling program for high-risk borrowers that provides long-term training (beginning prior to the first disbursement of the borrower’s first student loan and continuing through the completion of the borrower’s program of education or training) in budgeting and other aspects of financial management, including debt management; “(iii) establishing a program of placement counseling to assist high-risk borrowers in identifying employment or additional training opportunities; and “(iv) developing public service announcements that would detail consequences of student loan default and provide information regarding a toll-free telephone number established by the guaranty agency for use by borrowers seeking assistance in avoiding default. “(B) Reserve funds.— The term ‘reserve funds’ when used with respect to a guaranty agency— “(i) includes any reserve funds in cash or liquid assets held by the guaranty agency, or held by, or under the control of, any other entity; and “(ii) does not include buildings, equipment, or other nonliquid assets.”.

11. 1998

    Higher Education Amendments of 1998

    Pub. L. 105–244 § 412(1) · 112 Stat. 1581

    Substituted · 20 U.S.C. § 1072(a)(2)

    Pub. L. 105–244, § 412(1), substituted “section 1078(c)(9)(E)” for “section 1078(c)(10)(E)” in concluding provisions

    Source evidence

    Code amendment note
    Subsec. (a)(2). Pub. L. 105–244, § 412(1), substituted “section 1078(c)(9)(E)” for “section 1078(c)(10)(E)” in concluding provisions.

    Enacted provision · exact public law section
    (1) in subsection (a)(2), by striking “428(c)(10)(E)” and inserting “428(c)(9)(E)”;

    Effective date note
    Amendment by Pub. L. 105–244 effective Oct. 1, 1998, except as otherwise provided in Pub. L. 105–244, see section 3 of Pub. L. 105–244, set out as a note under section 1001 of this title.

12. 1998

    Higher Education Amendments of 1998

    Pub. L. 105–244 § 412(2)(A) · 112 Stat. 1581

    Substituted · 20 U.S.C. § 1072(c)(6)(B)(i)

    Pub. L. 105–244, § 412(2)(A), substituted “written, electronic,” for “written”

    Source evidence

    Code amendment note
    Subsec. (c)(6)(B)(i). Pub. L. 105–244, § 412(2)(A), substituted “written, electronic,” for “written”.

    Enacted provision · exact public law section
    (A) in paragraph (6)(B)(i), by striking “written” and inserting “written, electronic”;

    Effective date note
    Amendment by Pub. L. 105–244 effective Oct. 1, 1998, except as otherwise provided in Pub. L. 105–244, see section 3 of Pub. L. 105–244, set out as a note under section 1001 of this title.

13. 1998

    Higher Education Amendments of 1998

    Pub. L. 105–244 § 412(2)(B) · 112 Stat. 1581

    Struck · 20 U.S.C. § 1072(c)(7)(A)

    Pub. L. 105–244, § 412(2)(B), struck out “during the transition from the Federal Family Education Loan Program under this part to the Federal Direct Student Loan Program under part D of this subchapter” after “lender-of-last-resort”

    Source evidence

    Code amendment note
    Subsec. (c)(7)(A). Pub. L. 105–244, § 412(2)(B), struck out “during the transition from the Federal Family Education Loan Program under this part to the Federal Direct Student Loan Program under part D of this subchapter” after “lender-of-last-resort”.

    Enacted provision · exact public law section
    (B) in paragraph (7)(A), by striking “during the transition from the Federal Family Education Loan Program under this part to the Federal Direct Student Loan Program under part D of this title”; and

    Effective date note
    Amendment by Pub. L. 105–244 effective Oct. 1, 1998, except as otherwise provided in Pub. L. 105–244, see section 3 of Pub. L. 105–244, set out as a note under section 1001 of this title.

14. 1998

    Higher Education Amendments of 1998

    Pub. L. 105–244 § 412(2)(C) · 112 Stat. 1581

    Substituted · 20 U.S.C. § 1072(c)(7)(B)

    Pub. L. 105–244, § 412(2)(C), substituted “section 1078(c)(9)(F)(v)” for “section 1078(c)(10)(F)(v)”

    Source evidence

    Code amendment note
    Subsec. (c)(7)(B). Pub. L. 105–244, § 412(2)(C), substituted “section 1078(c)(9)(F)(v)” for “section 1078(c)(10)(F)(v)”.

    Enacted provision · exact public law section
    (C) in paragraph (7)(B), by striking “428(c)(10)(F)(v)” and inserting “428(c)(9)(F)(v)”;

    Effective date note
    Amendment by Pub. L. 105–244 effective Oct. 1, 1998, except as otherwise provided in Pub. L. 105–244, see section 3 of Pub. L. 105–244, set out as a note under section 1001 of this title.

15. 1998

    Higher Education Amendments of 1998

    Pub. L. 105–244 § 412(3) · 112 Stat. 1581

    Struck · 20 U.S.C. § 1072(g)(1)

    Pub. L. 105–244, § 412(3), struck out “or the program authorized by part D of this subchapter” after “program authorized by this part” in first and second sentences

    Source evidence

    Code amendment note
    Subsec. (g)(1). Pub. L. 105–244, § 412(3), struck out “or the program authorized by part D of this subchapter” after “program authorized by this part” in first and second sentences.

    Enacted provision · exact public law section
    (3) in the first and second sentences of subsection (g)(1), by striking “or the program authorized by part D of this title” each place it appears; and

    Effective date note
    Amendment by Pub. L. 105–244 effective Oct. 1, 1998, except as otherwise provided in Pub. L. 105–244, see section 3 of Pub. L. 105–244, set out as a note under section 1001 of this title.

16. 1998

    Higher Education Amendments of 1998

    Pub. L. 105–244 § 412(4) · 112 Stat. 1581

    Added · 20 U.S.C. § 1072(i)

    Pub. L. 105–244, § 412(4), added subsec. (i)

    Source evidence

    Code amendment note
    Subsec. (i). Pub. L. 105–244, § 412(4), added subsec. (i).

    Enacted provision · exact public law section
    (4) by adding at the end the following: “(i) Additional Recall of Reserves.— “(1) In general.— Notwithstanding any other provision of law and subject to paragraph (4), the Secretary shall recall, from reserve funds held in the Federal Student Loan Reserve Funds established under section 422A by guaranty agencies— “(A) $85,000,000 in fiscal year 2002; “(B) $82,500,000 in fiscal year 2006; and “(C) $82,500,000 in fiscal year 2007. “(2) Deposit.— Funds recalled by the Secretary under this subsection shall be deposited in the Treasury. “(3) Required share.— The Secretary shall require each guaranty agency to return reserve funds under paragraph (1) on the basis of the agency’s required share. For purposes of this paragraph, a guaranty agency’s required share shall be determined as follows: “(A) Equal percentage.— The Secretary shall require each guaranty agency to return an amount representing an equal percentage reduction in the amount of reserve funds held by the agency on September 30, 1996. “(B) Calculation.— The equal percentage reduction shall be the percentage obtained by dividing— “(i) $250,000,000, by “(ii) the total amount of all guaranty agencies’ reserve funds held on September 30, 1996, less any amounts subject to recall under subsection (h). “(C) Special rule.— Notwithstanding subparagraphs (A) and (B), the percentage reduction under subparagraph (B) shall not result in the depletion of the reserve funds of any agency which charges the 1.0 percent insurance premium pursuant to section 428(b)(1)(H) below an amount equal to the amount of lender claim payments paid during the 90 days prior to the date of the return under this subsection. If any additional amount is required to be returned after deducting the total of the required shares under subparagraph (B) and as a result of the preceding sentence, such additional amount shall be obtained by imposing on each guaranty agency to which the preceding sentence does not apply, an equal percentage reduction in the amount of the agency’s remaining reserve funds. “(4) Offset of required shares.— If any guaranty agency returns to the Secretary any reserve funds in excess of the amount required under this subsection or subsection (h), the total amount required to be returned under paragraph (1) shall be reduced by the amount of such excess reserve funds returned. “(5) Definition of reserve funds.— The term ‘reserve funds’ when used with respect to a guaranty agency— “(A) includes any reserve funds in cash or liquid assets held by the guaranty agency, or held by, or under the control of, any other entity; and “(B) does not include buildings, equipment, or other nonliquid assets.”.

    Effective date note
    Amendment by Pub. L. 105–244 effective Oct. 1, 1998, except as otherwise provided in Pub. L. 105–244, see section 3 of Pub. L. 105–244, set out as a note under section 1001 of this title.

17 of 17 references resolved to an enrolled provision