[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: 34CFR682.417]



[Page 761-764]

 

                           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. 682.417  Determination of Federal funds or assets to be returned.



    (a) General. The procedures described in this section apply to a 

determination by the Secretary that--

    (1) A guaranty agency must return to the Secretary a portion of its 

Federal Fund that the Secretary has determined is unnecessary to pay the 

program expenses and contingent liabilities of the agency; and

    (2) A guaranty agency must require the return to the agency or the 

Secretary of Federal funds or assets within the meaning of section 

422(g)(1) of the Act held by or under the control of any other entity 

that the Secretary determines are necessary to pay the program expenses 

and contingent liabilities of the agency or that are required for the 

orderly termination of the guaranty agency's operations and the 

liquidation of its assets.

    (b) Return of unnecessary Federal funds. (1) The Secretary may 

initiate a process to recover unnecessary Federal funds under paragraph 

(a)(1) of this section if the Secretary determines that a guaranty 

agency's Federal Fund ratio under Sec. 682.410(a)(10) for each of the 

two preceding Federal fiscal years exceeded 2.0 percent.

    (2) If the Secretary initiates a process to recover unnecessary 

Federal funds, the Secretary requires the return of a portion of the 

Federal funds that the Secretary determines will permit the agency to--

    (i) Have a Federal Fund ratio of at least 2.0 percent under Sec. 

682.410(a)(10) at the time of the determination; and



[[Page 762]]



    (ii) Meet the minimum Federal Fund requirements under Sec. 

682.410(a)(10) and retain sufficient additional Federal funds to perform 

its responsibilities as a guaranty agency during the current Federal 

fiscal year and the four succeeding Federal fiscal years.

    (3)(i) The Secretary makes a determination of the amount of Federal 

funds needed by the guaranty agency under paragraph (b)(2) of this 

section on the basis of financial projections for the period described 

in that paragraph. If the agency provides projections for a period 

longer than the period referred to in that paragraph, the Secretary may 

consider those projections.

    (ii) The Secretary may require a guaranty agency to provide 

financial projections in a form and on the basis of assumptions 

prescribed by the Secretary. If the Secretary requests the agency to 

provide financial projections, the agency must provide the projections 

within 60 days of the Secretary's request. If the agency does not 

provide the projections within the specified time period, the Secretary 

determines the amount of Federal funds needed by the agency on the basis 

of other information.

    (c) Notice. (1) The Secretary or an authorized Departmental official 

begins a proceeding to order a guaranty agency to return a portion of 

its Federal funds, or to direct the return of Federal funds or assets 

subject to return, by sending the guaranty agency a notice by certified 

mail, return receipt requested.

    (2) The notice--

    (i) Informs the guaranty agency of the Secretary's determination 

that Federal funds or assets must be returned;

    (ii) Describes the basis for the Secretary's determination and 

contains sufficient information to allow the guaranty agency to prepare 

and present an appeal;

    (iii) States the date by which the return of Federal funds or assets 

must be completed;

    (iv) Describes the process for appealing the determination, 

including the time for filing an appeal and the procedure for doing so; 

and

    (v) Identifies any actions that the guaranty agency must take to 

ensure that the Federal funds or assets that are the subject of the 

notice are maintained and protected against use, expenditure, transfer, 

or other disbursement after the date of the Secretary's determination, 

and the basis for requiring those actions. The actions may include, but 

are not limited to, directing the agency to place the Federal funds in 

an escrow account. If the Secretary has directed the guaranty agency to 

require the return of Federal funds or assets held by or under the 

control of another entity, the guaranty agency must ensure that the 

agency's claims to those funds or assets and the collectability of the 

agency's claims will not be compromised or jeopardized during an appeal. 

The guaranty agency must also comply with all other applicable 

regulations relating to the use of Federal funds and assets.

    (d) Appeal. (1) A guaranty agency may appeal the Secretary's 

determination that Federal funds or assets must be returned by filing a 

written notice of appeal within 20 days of the date of the guaranty 

agency's receipt of the notice of the Secretary's determination. If the 

agency files a notice of appeal, the requirement that the return of 

Federal funds or assets be completed by a particular date is suspended 

pending completion of the appeal process. If the agency does not file a 

notice of appeal within the period specified in this paragraph, the 

Secretary's determination is final.

    (2) A guaranty agency must submit the information described in 

paragraph (d)(4) of this section within 45 days of the date of the 

guaranty agency's receipt of the notice of the Secretary's determination 

unless the Secretary agrees to extend the period at the agency's 

request. If the agency does not submit that information within the 

prescribed period, the Secretary's determination is final.

    (3) A guaranty agency's appeal of a determination that Federal funds 

or assets must be returned is considered and decided by a Departmental 

official other than the official who issued the determination or a 

subordinate of that official.

    (4) In an appeal of the Secretary's determination, the guaranty 

agency must--



[[Page 763]]



    (i) State the reasons the guaranty agency believes the Federal funds 

or assets need not be returned;

    (ii) Identify any evidence on which the guaranty agency bases its 

position that Federal funds or assets need not be returned;

    (iii) Include copies of the documents that contain this evidence;

    (iv) Include any arguments that the guaranty agency believes support 

its position that Federal funds or assets need not be returned; and

    (v) Identify the steps taken by the guaranty agency to comply with 

the requirements referred to in paragraph (c)(2)(v) of this section.

    (5)(i) In its appeal, the guaranty agency may request the 

opportunity to make an oral argument to the deciding official for the 

purpose of clarifying any issues raised by the appeal. The deciding 

official provides this opportunity promptly after the expiration of the 

period referred to in paragraph (d)(2) of this section.

    (ii) The agency may not submit new evidence at or after the oral 

argument unless the deciding official determines otherwise. A transcript 

of the oral argument is made a part of the record of the appeal and is 

promptly provided to the agency.

    (6) The guaranty agency has the burden of production and the burden 

of persuading the deciding official that the Secretary's determination 

should be modified or withdrawn.

    (e) Third-party participation. (1) If the Secretary issues a 

determination under paragraph (a)(1) of this section, the Secretary 

promptly publishes a notice in the Federal Register announcing the 

portion of the Federal Fund to be returned by the agency and providing 

interested persons an opportunity to submit written information relating 

to the determination within 30 days after the date of publication. The 

Secretary publishes the notice no earlier than five days after the 

agency receives a copy of the determination.

    (2) If the guaranty agency to which the determination relates files 

a notice of appeal of the determination, the deciding official may 

consider any information submitted in response to the Federal Register 

notice. All information submitted by a third party is available for 

inspection and copying at the offices of the Department of Education in 

Washington, D.C., during normal business hours.

    (f) Adverse information. If the deciding official considers 

information in addition to the evidence described in the notice of the 

Secretary's determination that is adverse to the guaranty agency's 

position on appeal, the deciding official informs the agency and 

provides it a reasonable opportunity to respond to the information 

without regard to the period referred to in paragraph (d)(2) of this 

section.

    (g) Decision. (1) The deciding official issues a written decision on 

the guaranty agency's appeal within 45 days of the date on which the 

information described in paragraphs (d)(4) and (d)(5)(ii) of this 

section is received, or the oral argument referred to in paragraph 

(d)(5) of this section is held, whichever is later. The deciding 

official mails the decision to the guaranty agency by certified mail, 

return receipt requested. The decision of the deciding official becomes 

the final decision of the Secretary 30 days after the deciding official 

issues it. In the case of a determination that a guaranty agency must 

return Federal funds, if the deciding official does not issue a decision 

within the prescribed period, the agency is no longer required to take 

the actions described in paragraph (c)(2)(v) of this section.

    (2) A guaranty agency may not seek judicial review of the 

Secretary's determination to require the return of Federal funds or 

assets until the deciding official issues a decision.

    (3) The deciding official's written decision includes the basis for 

the decision. The deciding official bases the decision only on evidence 

described in the notice of the Secretary's determination and on 

information properly submitted and considered by the deciding official 

under this section. The deciding official is bound by all applicable 

statutes and regulations and may neither waive them nor rule them 

invalid.

    (h) Collection of Federal funds or assets. (1) If the deciding 

official's final decision requires the guaranty agency to return Federal 

funds, or requires the guaranty agency to require the return



[[Page 764]]



of Federal funds or assets to the agency or to the Secretary, the 

decision states a new date for compliance with the decision. The new 

date is no earlier than the date on which the decision becomes the final 

decision of the Secretary.

    (2) If the guaranty agency fails to comply with the decision, the 

Secretary may recover the Federal funds from any funds due the agency 

from the Department without any further notice or procedure and may take 

any other action permitted or authorized by law to compel compliance.



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

1845-0020)



[64 FR 58632, Oct. 29, 1999]