[Code of Federal Regulations]

[Title 34, Volume 3]

[Revised as of July 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 34CFR674.13]



[Page 567-568]

 

                           TITLE 34--EDUCATION

 

 CHAPTER VI--OFFICE OF POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION

 

PART 674_FEDERAL PERKINS LOAN PROGRAM--Table of Contents

 

                      Subpart A_General Provisions

 

Sec. 674.13  Reimbursement to the Fund.



    (a) The Secretary may require an institution to reimburse its Fund 

in an amount equal to that portion of the outstanding balance of--

    (1) A loan disbursed by the institution to a borrower in excess of 

the amount that the borrower was eligible to receive, as determined on 

the basis of information the institution had, or should have had, at the 

time of disbursement; or



[[Page 568]]



    (2) Except as provided in paragraph (b) of this section, a defaulted 

loan with regard to which the institution failed--

    (i) To record or retain the loan note in accordance with the 

requirements of this part;

    (ii) To record advances on the loan note in accordance with the 

requirements of this part; or

    (iii) To exercise due diligence in collecting in accordance with the 

requirements of this part.

    (b) The Secretary does not require an institution to reimburse its 

Fund for the portion of the outstanding balance of a defaulted loan 

described in paragraph (a)(2) of this section--

    (1) That the institution--

    (i) Recovers from the borrower or endorser; or

    (ii) Demonstrates, to the Secretary's satisfaction, would not have 

been collected from the borrower even if the institution complied in a 

timely manner with the due diligence requirements of subpart C of this 

part; or

    (2) On which the institution obtains a judgment.

    (c) An institution that is required to reimburse its Fund under 

paragraph (a) of this section shall also reimburse the Fund for the 

amount of the administrative cost allowance claimed by the institution 

for that portion of the loans to be reimbursed.

    (d) An institution that reimburses its Fund under paragraph (a) of 

this section thereby acquires for its own account all the right, title 

and interest of the Fund in the loan for which reimbursement has been 

made.



(Approved by the Office of Management and Budget under control number 

1845-0019)



(Authority: 20 U.S.C. 1087dd-1087hh)



[52 FR 45747, Dec. 1, 1987, as amended at 59 FR 61407, Nov. 30, 1994; 64 

FR 58315, Oct. 28, 1999; 65 FR 65614, Nov. 1, 2000]