[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: 34CFR682.422]



[Page 768-769]

 

                           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. 682.422  Guaranty agency repayment of funds transferred from the 

Federal Fund.



    (a) General. A guaranty agency must begin repayment of money 

transferred from the Federal Fund not later than the start of the 4th 

year after the agency establishes its Operating Fund. All amounts 

transferred must be repaid not later than five years after the date the 

Operating Fund is established.

    (b) Extension for repaying the interest transferred--(1) General. 

The Secretary may extend the period for repayment of interest 

transferred from the Federal Fund from two years to five years if the 

Secretary determines that the cash flow of the Operating Fund will be 

negative if the transferred interest had to be repaid earlier or the 

repayment of the interest would substantially diminish the financial 

circumstances of the agency.

    (2) Agency eligibility for an extension. To receive an extension, 

the agency must demonstrate that it will be able to repay all 

transferred funds by the end of the 8th year following the date of 

establishment of the Operating Fund and that the agency will be 

financially sound upon the completion of repayment.

    (3) Repayment of interest earned on transferred funds. If the 

Secretary extends the period for repayment of interest transferred from 

the Federal Fund for a guaranty agency, the agency must repay the amount 

of interest during the 6th, 7th, and 8th years following the 

establishment of the Operating Fund. In addition to repaying the amount 

of interest, the guaranty agency must also pay to the Secretary any 

income earned after the 5th year from the investment of the transferred 

amount. In determining the amount of income earned on the transferred



[[Page 769]]



amount, the Secretary uses the average investment income earned on the 

agency's Operating Fund.

    (c) Consequences if a guaranty agency fails to repay transfers from 

the Federal Fund. If a guaranty agency fails to make a scheduled 

repayment to the Federal Fund, the agency may not receive any other 

Federal funds until it becomes current in making all scheduled payments, 

unless the Secretary waives this restriction.



(Authority: 20 U.S.C. 1072-1)



[64 FR 58635, Oct. 29, 1999]