[Code of Federal Regulations]
[Title 34, Volume 3]
[Revised as of July 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 34CFR682.408]

[Page 754-755]
 
                           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 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 an escrow agent. The escrow 
agent shall transmit Stafford and PLUS 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), or Stafford Loan 
proceeds to a borrower in accordance with the requirements of Sec. 
682.207(b)(1)(i) and (ii), not later than 10 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

[[Page 755]]

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; 
71 FR 45708, Aug. 9, 2006; 71 FR 64399, Nov. 1, 2006]