{"identifier":"/us/usc/t20/s1072b","title":20,"num":"\u00a7\u202f1072b.","heading":"Agency Operating Fund","text":"\u00a7\u202f1072b.\nAgency Operating Fund\n(a)\nEstablishment\nEach guaranty agency shall, not later than 60 days after\nOctober 7, 1998\n(b)\nInvestment of funds\nFunds deposited into the Operating Fund shall be invested at the discretion of the guaranty agency in accordance with prudent investor standards.\n(c)\nAdditional deposits\nAfter the establishment of the Operating Fund, the guaranty agency shall deposit into the Operating Fund\u2014\n(1) the loan processing and issuance fee paid by the Secretary pursuant to\nsection 1078(f) of this title\n(2) 30 percent of amounts received after\nOctober 7, 1998\nOctober 7, 1998\n(3) the account maintenance fee paid by the Secretary in accordance with\nsection 1087h of this title\n(4) the default aversion fee paid in accordance with section 1078(\nl\n(5) amounts remaining pursuant to section 1078(c)(6)(B)\n1\n1 See References in Text note below.\nsection 1072a(c)(2) of this title\n(6) other receipts as specified in regulations of the Secretary.\n(d)\nUses of funds\n(1)\nIn general\nFunds in the Operating Fund shall be used for application processing, loan disbursement, enrollment and repayment status management, default aversion activities (including those described in\nsection 1072(h)(8) of this title\n(2)\nSpecial rule\nThe guaranty agency may, in the agency\u2019s discretion, transfer funds from the Operating Fund to the Federal Fund for use pursuant to\nsection 1072a of this title\n(3)\nDefinitions\nFor purposes of this subsection:\n(A)\nDefault collection activities\nThe term \u201cdefault collection activities\u201d means activities of a guaranty agency that are directly related to the collection of the loan on which a default claim has been paid to the participating lender, including the due diligence activities required pursuant to regulations of the Secretary.\n(B)\nDefault aversion activities\nThe term \u201cdefault aversion activities\u201d means activities of a guaranty agency that are directly related to providing collection assistance to the lender on a delinquent loan, prior to the loan\u2019s being legally in a default status, including due diligence activities required pursuant to regulations of the Secretary.\n(C)\nEnrollment and repayment status management\nThe term \u201cenrollment and repayment status management\u201d means activities of a guaranty agency that are directly related to ascertaining the student\u2019s enrollment status, including prompt notification to the lender of such status, an audit of the note or written agreement to determine if the provisions of that note or agreement are consistent with the records of the guaranty agency as to the principal amount of the loan guaranteed, and an examination of the note or agreement to assure that the repayment provisions are consistent with the provisions of this part.\n(e)\nOwnership and regulation of Operating Fund\n(1)\nOwnership\nThe Operating Fund, with the exception of funds transferred from the Federal Fund in accordance with\nsection 1072a(f) of this title\n(2)\nRegulation\nExcept as provided in paragraph (3), the Secretary may not regulate the uses or expenditure of moneys in the Operating Fund, but the Secretary may require such necessary reports and audits as provided in\nsection 1078(b)(2) of this title\n(3)\nException\nNotwithstanding paragraphs (1) and (2), during any period in which funds are owed to the Federal Fund as a result of transfer under\n(A) moneys in the Operating Fund may only be used for expenses related to the student loan programs authorized under this part; and\n(B) the Secretary may regulate the uses or expenditure of moneys in the Operating Fund.","url":"https://projectusc.org/usc/t20/s1072b.html","content":[{"t":"sec","id":"/us/usc/t20/s1072b","children":[{"t":"num","text":"\u00a7\u202f1072b."},{"t":"heading","text":"Agency Operating Fund"},{"t":"subsec","id":"/us/usc/t20/s1072b/a","children":[{"t":"num","text":"(a)"},{"t":"heading","text":"Establishment"},{"t":"content","children":[{"t":"p","text":"Each guaranty agency shall, not later than 60 days after ","children":[{"t":"text","text":"October 7, 1998","tail":", establish a fund designated as the Operating Fund."}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t20/s1072b/b","children":[{"t":"num","text":"(b)"},{"t":"heading","text":"Investment of funds"},{"t":"content","children":[{"t":"p","text":"Funds deposited into the Operating Fund shall be invested at the discretion of the guaranty agency in accordance with prudent investor standards.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t20/s1072b/c","children":[{"t":"num","text":"(c)"},{"t":"heading","text":"Additional deposits"},{"t":"chapeau","text":"After the establishment of the Operating Fund, the guaranty agency shall deposit into the Operating Fund\u2014"},{"t":"para","id":"/us/usc/t20/s1072b/c/1","children":[{"t":"num","text":"(1)"},{"t":"content","text":" the loan processing and issuance fee paid by the Secretary pursuant to ","children":[{"t":"ref","text":"section 1078(f) of this title","href":"/us/usc/t20/s1078/f","tail":";"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t20/s1072b/c/2","children":[{"t":"num","text":"(2)"},{"t":"content","text":" 30 percent of amounts received after ","children":[{"t":"text","text":"October 7, 1998","tail":", from the Secretary as payment for administrative cost allowances for loans upon which insurance was issued prior to "},{"t":"text","text":"October 7, 1998","tail":";"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t20/s1072b/c/3","children":[{"t":"num","text":"(3)"},{"t":"content","text":" the account maintenance fee paid by the Secretary in accordance with ","children":[{"t":"ref","text":"section 1087h of this title","href":"/us/usc/t20/s1087h","tail":";"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t20/s1072b/c/4","children":[{"t":"num","text":"(4)"},{"t":"content","text":" the default aversion fee paid in accordance with section 1078(","children":[{"t":"text","text":"l","tail":") of this title;"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t20/s1072b/c/5","children":[{"t":"num","text":"(5)"},{"t":"content","text":" amounts remaining pursuant to section 1078(c)(6)(B)\u202f","children":[{"t":"ref","text":"1"},{"t":"num","text":"1","tail":"\u202fSee References in Text note below."},{"t":"text","text":"\u202fSee References in Text note below.","tail":" of this title from collection on defaulted loans held by the agency, after payment of the Secretary\u2019s equitable share, excluding amounts deposited in the Federal Fund pursuant to "},{"t":"ref","text":"section 1072a(c)(2) of this title","href":"/us/usc/t20/s1072a/c/2","tail":"; and"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t20/s1072b/c/6","children":[{"t":"num","text":"(6)"},{"t":"content","text":" other receipts as specified in regulations of the Secretary.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t20/s1072b/d","children":[{"t":"num","text":"(d)"},{"t":"heading","text":"Uses of funds"},{"t":"para","id":"/us/usc/t20/s1072b/d/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"Funds in the Operating Fund shall be used for application processing, loan disbursement, enrollment and repayment status management, default aversion activities (including those described in ","children":[{"t":"ref","text":"section 1072(h)(8) of this title","href":"/us/usc/t20/s1072/h/8","tail":"), default collection activities, school and lender training, financial aid awareness and related outreach activities, compliance monitoring, and other student financial aid related activities, as selected by the guaranty agency."}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t20/s1072b/d/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Special rule"},{"t":"content","children":[{"t":"p","text":"The guaranty agency may, in the agency\u2019s discretion, transfer funds from the Operating Fund to the Federal Fund for use pursuant to ","children":[{"t":"ref","text":"section 1072a of this title","href":"/us/usc/t20/s1072a","tail":". Such transfer shall be irrevocable, and any funds so transferred shall become the sole property of the United States."}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t20/s1072b/d/3","children":[{"t":"num","text":"(3)"},{"t":"heading","text":"Definitions"},{"t":"chapeau","text":"For purposes of this subsection:"},{"t":"subpara","id":"/us/usc/t20/s1072b/d/3/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"Default collection activities"},{"t":"content","children":[{"t":"p","text":"The term \u201cdefault collection activities\u201d means activities of a guaranty agency that are directly related to the collection of the loan on which a default claim has been paid to the participating lender, including the due diligence activities required pursuant to regulations of the Secretary.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t20/s1072b/d/3/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Default aversion activities"},{"t":"content","children":[{"t":"p","text":"The term \u201cdefault aversion activities\u201d means activities of a guaranty agency that are directly related to providing collection assistance to the lender on a delinquent loan, prior to the loan\u2019s being legally in a default status, including due diligence activities required pursuant to regulations of the Secretary.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t20/s1072b/d/3/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"Enrollment and repayment status management"},{"t":"content","children":[{"t":"p","text":"The term \u201cenrollment and repayment status management\u201d means activities of a guaranty agency that are directly related to ascertaining the student\u2019s enrollment status, including prompt notification to the lender of such status, an audit of the note or written agreement to determine if the provisions of that note or agreement are consistent with the records of the guaranty agency as to the principal amount of the loan guaranteed, and an examination of the note or agreement to assure that the repayment provisions are consistent with the provisions of this part.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t20/s1072b/e","children":[{"t":"num","text":"(e)"},{"t":"heading","text":"Ownership and regulation of Operating Fund"},{"t":"para","id":"/us/usc/t20/s1072b/e/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"Ownership"},{"t":"content","children":[{"t":"p","text":"The Operating Fund, with the exception of funds transferred from the Federal Fund in accordance with ","children":[{"t":"ref","text":"section 1072a(f) of this title","href":"/us/usc/t20/s1072a/f","tail":", shall be considered to be the property of the guaranty agency."}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t20/s1072b/e/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Regulation"},{"t":"content","children":[{"t":"p","text":"Except as provided in paragraph (3), the Secretary may not regulate the uses or expenditure of moneys in the Operating Fund, but the Secretary may require such necessary reports and audits as provided in ","children":[{"t":"ref","text":"section 1078(b)(2) of this title","href":"/us/usc/t20/s1078/b/2","tail":"."}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t20/s1072b/e/3","children":[{"t":"num","text":"(3)"},{"t":"heading","text":"Exception"},{"t":"chapeau","text":"Notwithstanding paragraphs (1) and (2), during any period in which funds are owed to the Federal Fund as a result of transfer under ","children":[{"t":"ref","text":"section 1072a(f) of this title","href":"/us/usc/t20/s1072a/f","tail":"\u2014"}]},{"t":"subpara","id":"/us/usc/t20/s1072b/e/3/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" moneys in the Operating Fund may only be used for expenses related to the student loan programs authorized under this part; and","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t20/s1072b/e/3/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" the Secretary may regulate the uses or expenditure of moneys in the Operating Fund.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"}]}]}