 
      CHAPTER 28--HIGHER EDUCATION RESOURCES AND STUDENT ASSISTANCE
 
                    SUBCHAPTER IV--STUDENT ASSISTANCE
 
              Part B--Federal Family Education Loan Program
 
Sec. 1078-1. Voluntary flexible agreements with guaranty 
        agencies
        

(a) Voluntary agreements

                            (1) Authority

        Subject to paragraph (2), the Secretary may enter into a 
    voluntary, flexible agreement with a guaranty agency under this 
    section, in lieu of agreements with a guaranty agency under 
    subsections (b) and (c) of section 1078 of this title. The Secretary 
    may waive or modify any requirement under such subsections, except 
    that the Secretary may not waive--
            (A) any statutory requirement pertaining to the terms and 
        conditions attached to student loans or default claim payments 
        made to lenders; or
            (B) the prohibitions on inducements contained in section 
        1078(b)(3) of this title unless the Secretary determines that 
        such a waiver is consistent with the purposes of this section 
        and is limited to activities of the guaranty agency within the 
        State or States for which the guaranty agency serves as the 
        designated guarantor.

                          (2) Special rule

        If the Secretary grants a waiver pursuant to paragraph (1)(B), 
    any guaranty agency doing business within the affected State or 
    States may request, and the Secretary shall grant, an identical 
    waiver to such guaranty agency under the same terms and conditions 
    (including service area limitations) as govern the original waiver.

                           (3) Eligibility

        During fiscal years 1999, 2000, and 2001, the Secretary may 
    enter into a voluntary, flexible agreement with not more than 6 
    guaranty agencies that had 1 or more agreements with the Secretary 
    under subsections (b) and (c) of section 1078 of this title as of 
    the day before October 7, 1998. Beginning in fiscal year 2002, any 
    guaranty agency or consortium thereof may enter into a voluntary 
    flexible agreement with the Secretary.

                         (4) Report required

        Not later than September 30, 2001, the Secretary shall report to 
    the Committee on Labor and Human Resources of the Senate and the 
    Committee on Education and the Workforce of the House of 
    Representatives regarding the impact that the voluntary flexible 
    agreements have had upon program integrity, program and cost 
    efficiencies, and the availability and delivery of student financial 
    aid. Such report shall include--
            (A) a description of each voluntary flexible agreement and 
        the performance goals established by the Secretary for each 
        agreement;
            (B) a list of participating guaranty agencies and the 
        specific statutory or regulatory waivers provided to each 
        guaranty agency and any waivers provided to other guaranty 
        agencies under paragraph (2);
            (C) a description of the standards by which each agency's 
        performance under the agency's voluntary flexible agreement was 
        assessed and the degree to which each agency achieved the 
        performance standards; and
            (D) an analysis of the fees paid by the Secretary, and the 
        costs and efficiencies achieved under each voluntary agreement.

(b) Terms of agreement

    An agreement between the Secretary and a guaranty agency under this 
section--
        (1) shall be developed by the Secretary, in consultation with 
    the guaranty agency, on a case-by-case basis;
        (2) may only include provisions--
            (A) specifying the responsibilities of the guaranty agency 
        under the agreement, with respect to--
                (i) administering the issuance of insurance on loans 
            made under this part on behalf of the Secretary;
                (ii) monitoring insurance commitments made under this 
            part;
                (iii) default aversion activities;
                (iv) review of default claims made by lenders;
                (v) payment of default claims;
                (vi) collection of defaulted loans;
                (vii) adoption of internal systems of accounting and 
            auditing that are acceptable to the Secretary, and reporting 
            the result thereof to the Secretary in a timely manner, and 
            on an accurate, and auditable basis;
                (viii) timely and accurate collection and reporting of 
            such other data as the Secretary may require to carry out 
            the purposes of the programs under this subchapter and part 
            C of subchapter I of chapter 34 of title 42;
                (ix) monitoring of institutions and lenders 
            participating in the program under this part; and
                (x) informational outreach to schools and students in 
            support of access to higher education;

            (B) regarding the fees the Secretary shall pay, in lieu of 
        revenues that the guaranty agency may otherwise receive under 
        this part, to the guaranty agency under the agreement, and other 
        funds that the guaranty agency may receive or retain under the 
        agreement, except that in no case may the cost to the Secretary 
        of the agreement, as reasonably projected by the Secretary, 
        exceed the cost to the Secretary, as similarly projected, in the 
        absence of the agreement;
            (C) regarding the use of net revenues, as described in the 
        agreement under this section, for such other activities in 
        support of postsecondary education as may be agreed to by the 
        Secretary and the guaranty agency;
            (D) regarding the standards by which the guaranty agency's 
        performance of the agency's responsibilities under the agreement 
        will be assessed, and the consequences for a guaranty agency's 
        failure to achieve a specified level of performance on 1 or more 
        performance standards;
            (E) regarding the circumstances in which a guaranty agency's 
        agreement under this section may be ended in advance of the 
        agreement's expiration date;
            (F) regarding such other businesses, previously purchased or 
        developed with reserve funds, that relate to the program under 
        this part and in which the Secretary permits the guaranty agency 
        to engage; and
            (G) such other provisions as the Secretary may determine to 
        be necessary to protect the United States from the risk of 
        unreasonable loss and to promote the purposes of this part;

        (3) shall provide for uniform lender participation with the 
    guaranty agency under the terms of the agreement; and
        (4) shall not prohibit or restrict borrowers from selecting a 
    lender of the borrower's choosing, subject to the prohibitions and 
    restrictions applicable to the selection under this chapter.

(c) Public notice

                           (1) In general

        The Secretary shall publish in the Federal Register a notice to 
    all guaranty agencies that sets forth--
            (A) an invitation for the guaranty agencies to enter into 
        agreements under this section; and
            (B) the criteria that the Secretary will use for selecting 
        the guaranty agencies with which the Secretary will enter into 
        agreements under this section.

                        (2) Agreement notice

        The Secretary shall notify the Chairperson and the Ranking 
    Minority Member of the Committee on Labor and Human Resources of the 
    Senate and the Committee on Education and the Workforce of the House 
    of Representatives not later than 30 days prior to concluding an 
    agreement under this section. The notice shall contain--
            (A) a description of the voluntary flexible agreement and 
        the performance goals established by the Secretary for the 
        agreement;
            (B) a list of participating guaranty agencies and the 
        specific statutory or regulatory waivers provided to each 
        guaranty agency;
            (C) a description of the standards by which each guaranty 
        agency's performance under the agreement will be assessed; and
            (D) a description of the fees that will be paid to each 
        participating guaranty agency.

                          (3) Waiver notice

        The Secretary shall notify the Chairperson and the Ranking 
    Minority Member of the Committee on Labor and Human Resources of the 
    Senate and the Committee on Education and the Workforce of the House 
    of Representatives not later than 30 days prior to the granting of a 
    waiver pursuant to subsection (a)(2) of this section to a guaranty 
    agency that is not a party to a voluntary flexible agreement.

                       (4) Public availability

        The text of any voluntary flexible agreement, and any subsequent 
    revisions, and any waivers related to section 1078(b)(3) of this 
    title that are not part of such an agreement, shall be readily 
    available to the public.

                       (5) Modification notice

        The Secretary shall notify the Chairperson and the Ranking 
    Minority Members of the Committee on Labor and Human Resources of 
    the Senate and the Committee on Education and the Workforce of the 
    House of Representatives 30 days prior to any modifications to an 
    agreement under this section.

(d) Termination

    At the expiration or early termination of an agreement under this 
section, the Secretary shall reinstate the guaranty agency's prior 
agreements under subsections (b) and (c) of section 1078 of this title, 
subject only to such additional requirements as the Secretary determines 
to be necessary in order to ensure the efficient transfer of 
responsibilities between the agreement under this section and the 
agreements under subsections (b) and (c) of section 1078 of this title, 
and including the guaranty agency's compliance with reserve requirements 
under sections 1072 and 1078 of this title.

(Pub. L. 89-329, title IV, Sec. 428A, as added Pub. L. 105-244, title 
IV, Sec. 418, Oct. 7, 1998, 112 Stat. 1691.)

                       References in Text

    This chapter, referred to in subsec. (b)(4), was in the original 
``this Act'', meaning Pub. L. 89-329, as amended, known as the Higher 
Education Act of 1965. For complete classification of this Act to the 
Code, see Short Title note set out under section 1001 of this title and 
Tables.


                            Prior Provisions

    A prior section 1078-1, Pub. L. 89-329, title IV, Sec. 428A, as 
added Pub. L. 99-498, title IV, Sec. 402(a), Oct. 17, 1986, 100 Stat. 
1384; amended Pub. L. 100-50, Sec. 10(n), (o)(1), (p)(1), (q), (r)(1), 
June 3, 1987, 101 Stat. 343, 344; Pub. L. 100-369, Secs. 3-5(a), (b)(3), 
July 18, 1988, 102 Stat. 835, 836; Pub. L. 101-239, title II, 
Sec. 2003(a)(1), (b)(1), (c)(1), Dec. 19, 1989, 103 Stat. 2112, 2114; 
Pub. L. 101-508, title III, Sec. 3006(b), Nov. 5, 1990, 104 Stat. 1388-
28; Pub. L. 102-26, Sec. 2(c)(1), Apr. 9, 1991, 105 Stat. 123; Pub. L. 
102-325, title IV, Sec. 417, July 23, 1992, 106 Stat. 529; Pub. L. 103-
208, Sec. 2(c)(29)-(32), Dec. 20, 1993, 107 Stat. 2465, 2466, related to 
Federal supplemental loans for students, prior to repeal by Pub. L. 103-
66, title IV, Sec. 4047(b), (d), Aug. 10, 1993, 107 Stat. 364, effective 
July 1, 1994.
    Another prior section 1078-1, Pub. L. 89-329, title IV, Sec. 428A, 
as added Pub. L. 94-482, title I, Sec. 127(a), Oct. 12, 1976, 90 Stat. 
2120; amended Pub. L. 95-43, Sec. 1(a)(30)-(32), June 15, 1977, 91 Stat. 
216; Pub. L. 96-374, title IV, Sec. 412(e), (f), title XIII, 
Sec. 1391(a)(1), Oct. 3, 1980, 94 Stat. 1416, 1417, 1503; Pub. L. 97-35, 
title V, Sec. 535(e), Aug. 13, 1981, 95 Stat. 455, related to student 
loan insurance programs, prior to the general amendment of this part by 
Pub. L. 99-498.


                             Effective Date

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