 
      CHAPTER 28--HIGHER EDUCATION RESOURCES AND STUDENT ASSISTANCE
 
                    SUBCHAPTER IV--STUDENT ASSISTANCE
 
              Part B--Federal Family Education Loan Program
 
Sec. 1072b. Agency Operating Fund


(a) Establishment

    Each guaranty agency shall, not later than 60 days after October 7, 
1998, establish a fund designated as the Operating Fund.

(b) Investment of funds

    Funds deposited into the Operating Fund shall be invested at the 
discretion of the guaranty agency in accordance with prudent investor 
standards.

(c) Additional deposits

    After the establishment of the Operating Fund, the guaranty agency 
shall deposit into the Operating Fund--
        (1) the loan processing and issuance fee paid by the Secretary 
    pursuant to section 1078(f) of this title;
        (2) 30 percent of amounts received after October 7, 1998, from 
    the Secretary as payment for administrative cost allowances for 
    loans upon which insurance was issued prior to October 7, 1998;
        (3) the account maintenance fee paid by the Secretary in 
    accordance with section 1087h of this title;
        (4) the default aversion fee paid in accordance with section 
    1078(l) of this title;
        (5) amounts remaining pursuant to section 1078(c)(6)(B) of this 
    title from collection on defaulted loans held by the agency, after 
    payment of the Secretary's equitable share, excluding amounts 
    deposited in the Federal Fund pursuant to section 1072a(c)(2) of 
    this title; and
        (6) other receipts as specified in regulations of the Secretary.

(d) Uses of funds

                           (1) In general

        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 section 1072(h)(8) of this title), 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.

                          (2) Special rule

        The guaranty agency may, in the agency's discretion, transfer 
    funds from the Operating Fund to the Federal Fund for use pursuant 
    to section 1072a of this title. Such transfer shall be irrevocable, 
    and any funds so transferred shall become the sole property of the 
    United States.

                           (3) Definitions

        For purposes of this subsection:

        (A) Default collection activities

            The term ``default collection activities'' 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.

        (B) Default aversion activities

            The term ``default aversion activities'' 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's being legally in a default status, including due 
        diligence activities required pursuant to regulations of the 
        Secretary.

        (C) Enrollment and repayment status management

            The term ``enrollment and repayment status management'' 
        means activities of a guaranty agency that are directly related 
        to ascertaining the student's 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.

(e) Ownership and regulation of Operating Fund

                            (1) Ownership

        The Operating Fund, with the exception of funds transferred from 
    the Federal Fund in accordance with section 1072a(f) of this title, 
    shall be considered to be the property of the guaranty agency.

                           (2) Regulation

        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 section 1078(b)(2) of this title.

                            (3) Exception

        Notwithstanding paragraphs (1) and (2), during any period in 
    which funds are owed to the Federal Fund as a result of transfer 
    under section 1072a(f) of this title--
            (A) moneys in the Operating Fund may only be used for 
        expenses related to the student loan programs authorized under 
        this part; and
            (B) the Secretary may regulate the uses or expenditure of 
        moneys in the Operating Fund.

(Pub. L. 89-329, title IV, Sec. 422B, as added Pub. L. 105-244, title 
IV, Sec. 413(b), Oct. 7, 1998, 112 Stat. 1677.)


                             Effective Date

    Section effective Oct. 1, 1998, except as otherwise provided in Pub. 
L. 105-244, see section 3 of Pub. L. 105-244, set out as an Effective 
Date of 1998 Amendment note under section 1001 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 1072a, 1078, 1087h of this 
title.
