[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: 34CFR682.403]



[Page 724-725]

 

                           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. 682.403  Federal advances for claim payments.



    (a) The Secretary makes an advance to a guaranty agency that has a 

reinsurance agreement. The advance may be used only to pay guarantee 

claims. The Secretary makes an advance to--

    (1) A State guaranty agency; or

    (2) 1 or more private nonprofit guarantee agencies in a State if, 

during a fiscal year--

    (i) The State does not have a guaranty agency program;

    (ii) The Secretary consults the chief executive officer of the State 

and finds it unlikely that the State will have a program for that year; 

and

    (iii) Each private nonprofit guaranty agency--

    (A) Agrees to establish at least 1 office in the State with 

sufficient staff to handle written and telephone inquiries from 

students, eligible lenders, and other persons in the State;

    (B) Agrees to encourage maximum commercial lender participation 

within the State and to conduct periodic visits to at least the major 

lenders within the State;

    (C) Agrees that the benefit of its loan guarantees will not be 

denied to students because of their choice of schools or lack of need; 

and

    (D) Certifies that it is not an institution of higher education and 

that it does not have any substantial affiliation with an institution of 

higher education.

    (b) A guaranty agency shall apply to the Secretary in order to 

receive an initial advance.



[[Page 725]]



    (c)(1) An advance may be made to a new guaranty agency for each of 

five consecutive calendar years. A new agency is an agency that entered 

into a basic agreement on or after October 12, 1976, or that was not 

actively carrying on a loan guarantee program on or before October 12, 

1976.

    (2)(i) A guaranty agency may request that the initial advance be 

made on a specified date. The Secretary pays subsequent advances on the 

same day that the initial advance was made for each of the four 

succeeding calendar years.

    (ii) An additional advance may be made to a private nonprofit 

guaranty agency only if the agency continues to qualify under paragraph 

(a) of this section.

    (d) The Secretary makes an advance to a guaranty agency--

    (1) On terms and conditions specified in an agreement between the 

Secretary and the guaranty agency;

    (2) To ensure that the agency will fulfill its lender-of-last resort 

obligation; and

    (3) To meet the agency's immediate cash needs and to ensure the 

uninterrupted payment of claims when the Secretary has terminated the 

agency's agreement and assumed its functions.

    (e) In the case of a private nonprofit guaranty agency, the 

repayment of advances is determined separately for each State for which 

the agency has received in advance under this section, in accordance 

with section 422(c)(4) of the Act.

    (f) A guaranty agency shall return advances provided under this 

section in accordance with the provisions of section 422 of the Act.



(Authority: 20 U.S.C. 1072, 1082)



[57 FR 60323, Dec. 18, 1992, as amended at 64 FR 18980, Apr. 16, 1999]