[Code of Federal Regulations]
[Title 34, Volume 3]
[Revised as of July 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 34CFR682.403]

[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. 682.403  Federal advances for claim payments.

    (a) The Secretary makes an advance to a guaranty agency that has a
reinsurance agreement. The advance may be used only to pay guarantee
claims. The Secretary makes an advance to--
    (1) A State guaranty agency; or
    (2) 1 or more private nonprofit guarantee agencies in a State if,
during a fiscal year--
    (i) The State does not have a guaranty agency program;
    (ii) The Secretary consults the chief executive officer of the State
and finds it unlikely that the State will have a program for that year;
and
    (iii) Each private nonprofit guaranty agency--
    (A) Agrees to establish at least 1 office in the State with
sufficient staff to handle written and telephone inquiries from
students, eligible lenders, and other persons in the State;
    (B) Agrees to encourage maximum commercial lender participation
within the State and to conduct periodic visits to at least the major
lenders within the State;
    (C) Agrees that the benefit of its loan guarantees will not be
denied to students because of their choice of schools or lack of need;
and
    (D) Certifies that it is not an institution of higher education and
that it

[[Page 769]]

does not have any substantial affiliation with an institution of higher
education.
    (b) A guaranty agency shall apply to the Secretary in order to
receive an initial advance.
    (c)(1) An advance may be made to a new guaranty agency for each of
five consecutive calendar years. A new agency is an agency that entered
into a basic agreement on or after October 12, 1976, or that was not
actively carrying on a loan guarantee program on or before October 12,
1976.
    (2)(i) A guaranty agency may request that the initial advance be
made on a specified date. The Secretary pays subsequent advances on the
same day that the initial advance was made for each of the four
succeeding calendar years.
    (ii) An additional advance may be made to a private nonprofit
guaranty agency only if the agency continues to qualify under paragraph
(a) of this section.
    (d) The Secretary makes an advance to a guaranty agency--
    (1) On terms and conditions specified in an agreement between the
Secretary and the guaranty agency;
    (2) To ensure that the agency will fulfill its lender-of-last resort
obligation; and
    (3) To meet the agency's immediate cash needs and to ensure the
uninterrupted payment of claims when the Secretary has terminated the
agency's agreement and assumed its functions.
    (e) In the case of a private nonprofit guaranty agency, the
repayment of advances is determined separately for each State for which
the agency has received in advance under this section, in accordance
with section 422(c)(4) of the Act.
    (f) A guaranty agency shall return advances provided under this
section in accordance with the provisions of section 422 of the Act.

(Authority: 20 U.S.C. 1072, 1082)

[57 FR 60323, Dec. 18, 1992, as amended at 64 FR 18980, Apr. 16, 1999]