 
      CHAPTER 28--HIGHER EDUCATION RESOURCES AND STUDENT ASSISTANCE
 
                    SUBCHAPTER IV--STUDENT ASSISTANCE
 
              Part B--Federal Family Education Loan Program
 
Sec. 1081. Insurance fund


(a) Establishment

    There is hereby established a student loan insurance fund 
(hereinafter in this section called the ``fund'') which shall be 
available without fiscal year limitation to the Secretary for making 
payments in connection with the default of loans insured by the 
Secretary under this part, or in connection with payments under a 
guaranty agreement under section 1078(c) of this title. All amounts 
received by the Secretary as premium charges for insurance and as 
receipts, earnings, or proceeds derived from any claim or other assets 
acquired by the Secretary in connection with operations under this part, 
any excess advances under section 1072 of this title, and any other 
moneys, property, or assets derived by the Secretary from operations in 
connection with this section, shall be deposited in the fund. All 
payments in connection with the default of loans insured by the 
Secretary under this part, or in connection with such guaranty 
agreements shall be paid from the fund. Moneys in the fund not needed 
for current operations under this section may be invested in bonds or 
other obligations guaranteed as to principal and interest by the United 
States.

(b) Borrowing authority

    If at any time the moneys in the fund are insufficient to make 
payments in connection with the default of any loan insured by the 
Secretary under this part, or in connection with any guaranty agreement 
made under section 1078(c) of this title, the Secretary is authorized, 
to the extent provided in advance by appropriations Acts, to issue to 
the Secretary of the Treasury notes or other obligations in such forms 
and denominations, bearing such maturities, and subject to such terms 
and conditions as may be prescribed by the Secretary with the approval 
of the Secretary of the Treasury. Such notes or other obligations shall 
bear interest at a rate determined by the Secretary of the Treasury, 
taking into consideration the current average market yield on 
outstanding marketable obligations of the United States of comparable 
maturities during the month preceding the issuance of the notes or other 
obligations. The Secretary of the Treasury is authorized and directed to 
purchase any notes and other obligations issued hereunder and for that 
purpose is authorized to use as a public debt transaction the proceeds 
from the sale of any securities issued under chapter 31 of title 31, and 
the purposes for which securities may be issued under that chapter, are 
extended to include any purchase of such notes and obligations. The 
Secretary of the Treasury may at any time sell any of the notes or other 
obligations acquired under this subsection. All redemptions, purchases, 
and sales by the Secretary of the Treasury of such notes or other 
obligations shall be treated as public debt transactions of the United 
States. Sums borrowed under the subsection shall be deposited in the 
fund and redemption of such notes and obligations shall be made by the 
Secretary from such fund.

(Pub. L. 89-329, title IV, Sec. 431, as added Pub. L. 99-498, title IV, 
Sec. 402(a), Oct. 17, 1986, 100 Stat. 1400; amended Pub. L. 100-50, 
Sec. 10(w), June 3, 1987, 101 Stat. 346.)

                          Codification

    In subsec. (b), ``chapter 31 of title 31'' and ``that chapter'' 
substituted for ``the Second Liberty Bond Act, as amended'' and ``that 
Act, as amended'', respectively, on authority of Pub. L. 97-258, 
Sec. 4(b), Sept. 13, 1982, 96 Stat. 1067, the first section of which 
enacted Title 31, Money and Finance.


                            Prior Provisions

    A prior section 1081, Pub. L. 89-329, title IV, Sec. 431, Nov. 8, 
1965, 79 Stat. 1245; Pub. L. 90-460, Sec. 3(c), Aug. 3, 1968, 82 Stat. 
638; Pub. L. 94-482, title I, Sec. 127(a), Oct. 12, 1976, 90 Stat. 2126; 
Pub. L. 96-374, title XIII, Sec. 1391(a)(1), Oct. 3, 1980, 94 Stat. 
1503, related to a student loan insurance fund, prior to the general 
revision of this part by Pub. L. 99-498.


                               Amendments

    1987--Subsec. (a). Pub. L. 100-50 substituted ``section 1072 of this 
title'' for ``section 1072(a)(4)(C) of this title''.


                    Effective Date of 1987 Amendment

    Amendment by Pub. L. 100-50 effective as if enacted as part of the 
Higher Education Amendments of 1986, Pub. L. 99-498, see section 27 of 
Pub. L. 100-50, set out as a note under section 1001 of this title.


              Federal Family Education Loan Insurance Fund

    Pub. L. 105-244, title IV, Sec. 434, Oct. 7, 1998, 112 Stat. 1711, 
provided that: ``Any funds in the insurance fund, as established under 
section 431 of the Higher Education Act of 1965 (20 U.S.C. 1081), on the 
date of enactment of this Act [Oct. 7, 1998] shall be transferred to and 
deposited in the Treasury. All funds received by the Secretary of 
Education under subsection (a) of such section after the date of 
enactment of this Act shall be deposited into the fund in accordance 
with such subsection.''


   Transfer of Assets and Liabilities of the Vocational Student Loan 
                             Insurance Fund

    All assets and liabilities of the vocational student loan insurance 
fund transferred to the student loan insurance fund, see section 
116(c)(2) of Pub. L. 90-575, set out as a note under former section 981 
et seq. of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 1071, 1072, 1078, 1078-3, 
1087-1, 1087-2 of this title.
