[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: 34CFR682.421]



[Page 767-768]

 

                           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 Sec. Sec. 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 Sec. Sec. 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 Sec. Sec. 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



[[Page 768]]



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 Sec. Sec. 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 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]