Laws & Guidance HIGHER EDUCATION
1998 Amendments to Higher Education Act of 1965
P.L. 105-244

TITLE IV--STUDENT ASSISTANCE

Part B--Federal Family Education Loan Program

SEC. 412. ADVANCES TO RESERVE FUNDS

Section 422 (20 U.S.C. 1072) is amended--

(1) in subsection (a)(2), by striking `428(c)(10)(E)' and inserting `428(c)(9)(E)';

(2) in subsection (c)--

(A) in paragraph (6)(B)(i), by striking `written' and inserting `written, electronic,';

(B) in paragraph (7)(A), by striking `during the transition from the Federal Family Education Loan Program under this part to the Federal Direct Student Loan Program under part D of this title'; and

(C) in paragraph (7)(B), by striking `428(c)(10)(F)(v)' and inserting `428(c)(9)(F)(v)';

(3) in the first and second sentences of subsection (g)(1), by striking `or the program authorized by part D of this title' each place it appears; and

(4) by adding at the end the following:

`(i) ADDITIONAL RECALL OF RESERVES-

`(1) IN GENERAL- Notwithstanding any other provision of law and subject to paragraph (4), the Secretary shall recall, from reserve funds held in the Federal Student Loan Reserve Funds established under section 422A by guaranty agencies--

`(A) $85,000,000 in fiscal year 2002;

`(B) $82,500,000 in fiscal year 2006; and

`(C) $82,500,000 in fiscal year 2007.

`(2) DEPOSIT- Funds recalled by the Secretary under this subsection shall be deposited in the Treasury.

`(3) REQUIRED SHARE- The Secretary shall require each guaranty agency to return reserve funds under paragraph (1) on the basis of the agency's required share. For purposes of this paragraph, a guaranty agency's required share shall be determined as follows:

`(A) EQUAL PERCENTAGE- The Secretary shall require each guaranty agency to return an amount representing an equal percentage reduction in the amount of reserve funds held by the agency on September 30, 1996.

`(B) CALCULATION- The equal percentage reduction shall be the percentage obtained by dividing--

`(i) $250,000,000, by

`(ii) the total amount of all guaranty agencies' reserve funds held on September 30, 1996, less any amounts subject to recall under subsection (h).

`(C) SPECIAL RULE- Notwithstanding subparagraphs (A) and (B), the percentage reduction under subparagraph (B) shall not result in the depletion of the reserve funds of any agency which charges the 1.0 percent insurance premium pursuant to section 428(b)(1)(H) below an amount equal to the amount of lender claim payments paid during the 90 days prior to the date of the return under this subsection. If any additional amount is required to be returned after deducting the total of the required shares under subparagraph (B) and as a result of the preceding sentence, such additional amount shall be obtained by imposing on each guaranty agency to which the preceding sentence does not apply, an equal percentage reduction in the amount of the agency's remaining reserve funds.

`(4) OFFSET OF REQUIRED SHARES- If any guaranty agency returns to the Secretary any reserve funds in excess of the amount required under this subsection or subsection (h), the total amount required to be returned under paragraph (1) shall be reduced by the amount of such excess reserve funds returned.

`(5) DEFINITION OF RESERVE FUNDS- The term `reserve funds' when used with respect to a guaranty agency--

`(A) includes any reserve funds in cash or liquid assets held by the guaranty agency, or held by, or under the control of, any other entity; and

`(B) does not include buildings, equipment, or other nonliquid assets.'.

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Last Modified: 09/23/2003