[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: 34CFR682.501]



[Page 770-771]

 

                           TITLE 34--EDUCATION

 

 CHAPTER VI--OFFICE OF POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION

 

PART 682_FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAM--Table of Contents

 

           Subpart E_Federal Guaranteed Student Loan Programs

 

Sec. 682.501  Extent of Federal guarantee under the Federal GSL programs.



    (a) General. Except as provided in paragraph (b) of this section, 

the Secretary's guarantee liability on any Federal GSL loan is 100 

percent of the unpaid principal balance and, to the extent permitted 

under Sec. 682.512, accrued interest.

    (b) Special provisions for State lenders. (1) Except as described in 

paragraph (b)(2) of this section, the Secretary's guarantee liability is 

less than 100 percent under the following conditions:

    (i) If the total of default claims under the Federal GSL programs 

paid by the Secretary to a State lender during any fiscal year reaches 

five percent of the amount of the Federal GSL loans in repayment at the 

end of the preceding fiscal year, the Secretary's guarantee liability on 

a claim subsequently paid during that fiscal year is 90 percent of the 

amount of the unpaid principal balance plus accrued interest.

    (ii) If the total of default claims under the Federal GSL programs 

paid by the Secretary to a State lender during any fiscal year reaches 

nine percent of the amount of the Federal GSL loans in repayment at the 

end of the preceding fiscal year, the Secretary's guarantee liability on 

a claim subsequently paid during that fiscal year is 80 percent of the 

amount of the unpaid principal balance plus accrued interest.

    (iii) For purposes of this paragraph, the total default claims paid 

by the Secretary during any fiscal year do not include paid claims filed 

by the lender under the provisions of Sec. 682.412(e) or Sec. 682.509.

    (2) The potential reduction in guarantee liability does not apply to 

a State lender during the first Federal fiscal year of its operation as 

a Federal



[[Page 771]]



GSL Program lender and during each of the four succeeding fiscal years.

    (3) For the purposes of this section, the term ``amount of the 

Federal GSL loans in repayment'' means the original principal amount of 

all loans guaranteed by the Secretary less--

    (i) The original principal amount of loans on which--

    (A) Under the FISL program, the borrower has not yet reached the 

repayment period;

    (B) Payment in full has been made by the borrower;

    (C) The borrower was in deferment status at the time repayment of 

principal was scheduled to begin and remains in deferment status; or

    (D) The Secretary has paid a claim filed under section 437 of the 

Act; and

    (ii) The amount paid by the Secretary for default claims on loans, 

exclusive of paid claims filed by the lender under Sec. 682.412(e) or 

Sec. 682.509.

    (4) For the purposes of this paragraph, payments by the Secretary on 

a loan that the original lender assigned to a subsequent holder are 

considered payments made to the original lender.

    (5) State lenders shall consolidate Federal GSL loans for the 

purpose of calculating the amount of the Secretary's guarantee liability 

under this section.



(Authority: 20 U.S.C. 1077, 1078-1, 1078-2, 1078-3, 1082)