[Code of Federal Regulations]
[Title 34, Volume 3]
[Revised as of July 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 34CFR682.421]

[Page 777-778]
 
                           TITLE 34--EDUCATION
 
             CHAPTER VI--OFFICE OF POSTSECONDARY EDUCATION,
                         DEPARTMENT OF EDUCATION
 
PART 682--FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAM--Table of Contents
 
Subpart D--Administration of the Federal Family Education Loan Programs 
                          by a Guaranty Agency
 
Sec. 682.421  Funds transferred from the Federal Fund to the Operating Fund by a guaranty agency.

    (a) General. In accordance with this section, a guaranty agency may 
request the Secretary's permission to transfer a limited amount of funds 
from the Federal Fund to the Operating Fund. Upon receiving the 
Secretary's approval, the agency may transfer the requested funds at any 
time within 6 months following the date specified by the Secretary. If 
the Secretary has not approved or disapproved the agency's request 
within 30 days after receiving it, the agency may transfer the requested 
funds at any time within the 6-month period beginning on the 31st day 
after the Secretary received the agency's request. The transferred funds 
may be used only as permitted by Secs. 682.410(a)(2) and 682.418.
    (b) Transferring the principal balance of the Federal Fund--(1) 
Amount that may be transferred. Upon receiving the Secretary's approval, 
an agency may transfer an amount up to the equivalent of 180 days of 
cash expenses for purposes allowed by Secs. 682.410(a)(2) and 682.418 
(not including claim payments) for normal operating expenses to be 
deposited into the agency's Operating Fund. The amount transferred and 
outstanding at any time during the first 3 years after establishing the 
Operating Fund may not exceed the lesser of 180 days cash expenses for 
purposes allowed by Secs. 682.410(a)(2) and 682.418 (not including claim 
payments), or 45 percent of the balance in the Federal reserve fund that 
existed under Sec. 682.410 as of September 30, 1998.
    (2) Requirements for requesting a transfer. A guaranty agency that 
wishes to transfer principal from the Federal Fund must provide the 
Secretary with a proposed repayment schedule and evidence that it can 
repay the transfer according to its proposed schedule. The agency must 
provide the Secretary with the following:
    (i) A request for the transfer that specifies the desired amount, 
the date the funds will be needed, and the agency's proposed terms of 
repayment;
    (ii) A projected revenue and expense statement, to be updated 
annually during the repayment period, that demonstrates that the agency 
will be able to repay the transferred amount within the repayment period 
requested by the agency; and
    (iii) Certifications by the agency that during the period while the 
transferred funds are outstanding--
    (A) Sufficient funds will remain in the Federal Fund to pay lender 
claims during the period the transferred funds are outstanding;
    (B) The agency will be able to meet the reserve recall requirements 
of section 422 of the Act;
    (C) The agency will be able to meet the statutory minimum reserve 
level of 0.25 percent, as mandated by section 428(c)(9) of the Act; and
    (D) No legal prohibition exists that would prevent the agency from 
obtaining or repaying the transferred funds.
    (c) Transferring interest earned on the Federal Fund. (1) Amount 
that may be transferred. The Secretary may permit an agency that owes 
the Federal Fund the maximum amount allowable under paragraph (b) of 
this section to transfer the interest income earned on the Federal Fund 
during the 3-year period following October 7, 1998. The combined amount 
of transferred interest and the amount of principal transferred under 
paragraph (b) of this section may exceed 180 days cash expenses for 
purposes allowed by Secs. 682.410(a)(2) and 682.418 (not including claim 
payments), but may not exceed 45 percent of the balance in the Federal 
reserve fund

[[Page 778]]

that existed under Sec. 682.410 as of September 30, 1998.
    (2) Requirements for requesting a transfer. To be allowed to 
transfer the interest income, in addition to the items in paragraph 
(b)(2) of this section, the agency must demonstrate to the Secretary 
that the cash flow in the Operating Fund will be negative if the agency 
is not authorized to transfer the interest, and, by transferring the 
interest, the agency will substantially improve its financial 
circumstances.

(Approved by the Office of Management and Budget under control number 
1845-0020)

(Authority: 20 U.S.C. 1072-1)

[64 FR 58635, Oct. 29, 1999]