[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: 34CFR682.408]



[Page 731-732]

 

                           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. 682.408  Loan disbursement through an escrow agent.



    (a) General. (1) A guaranty agency or an eligible lender may act as 

an escrow agent for the purpose of receiving Stafford and PLUS loan 

proceeds disbursed by an eligible lender other than a school, State 

lender, or a State agency



[[Page 732]]



or instrumentality, and transmitting those proceeds to the borrower's 

school if the lender and the escrow agent have entered into a written 

agreement for this purpose.

    (2) The agreement must provide that--

    (i) The lender may make payments into an escrow account that is 

administered by the escrow agent in accordance with the requirements of 

paragraph (c) of this section and Sec. 682.207(b)(1)(iv);

    (ii) The lender shall promptly notify the borrower's school when 

funds are escrowed for the borrower; and

    (iii) The escrow agent is authorized to--

    (A) Transmit the proceeds according to the note evidencing the loan;

    (B) Commingle the proceeds of the loans paid to it pursuant to an 

escrow agreement;

    (C) Invest the loan proceeds only in obligations of the Federal 

Government or obligations that are insured or guaranteed by the Federal 

Government; and

    (D) Retain for its own use interest or other earnings on those 

investments.

    (b) Disbursement by the lender. Subject to Sec. 682.207(b)(1)(iii), 

the lender may disburse the loan proceeds to the escrow agent using any 

method agreed to by the escrow agent and the lender.

    (c) Transmittal of FFEL loan proceeds by the escrow agent. (1) The 

escrow agent shall transmit Stafford and SLS loan proceeds received from 

a lender under this section to a school in accordance with the 

requirements of Sec. 682.207(b)(1) (ii) and (iv) not later than 21 days 

after the agent receives the funds from the lender.

    (2) The escrow agent shall transmit PLUS loan proceeds received from 

a lender under this section to a borrower in accordance with the 

requirements of Sec. 682.207(b)(1) (ii) and (iv) not later than 21 days 

after the agent receives the funds from the lender.

    (d) Return of untransmitted proceeds. The escrow agent shall return 

any untransmitted proceeds of a loan to the lender within 15 working 

days after receiving information indicating that the student has not 

enrolled, or has ceased to be enrolled on at least a half-time basis, 

for the period of enrollment for which the loan was intended.



(Authority: 20 U.S.C. 1078, 1082)



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