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[Laws in effect as of January 3, 2006]
[CITE: 20USC1082]
TITLE 20--EDUCATION
CHAPTER 28--HIGHER EDUCATION RESOURCES AND STUDENT ASSISTANCE
SUBCHAPTER IV--STUDENT ASSISTANCE
Part B--Federal Family Education Loan Program
Sec. 1082. Legal powers and responsibilities
(a) General powers
In the performance of, and with respect to, the functions, powers,
and duties, vested in him by this part, the Secretary may--
(1) prescribe such regulations as may be necessary to carry out
the purposes of this part, including regulations applicable to third
party servicers (including regulations concerning financial
responsibility standards for, and the assessment of liabilities for
program violations against, such servicers) to establish minimum
standards with respect to sound management and accountability of
programs under this part, except that in no case shall damages be
assessed against the United States for the actions or inactions of
such servicers;
(2) sue and be sued in any court of record of a State having
general jurisdiction or in any district court of the United States,
and such district courts shall have jurisdiction of civil actions
arising under this part without regard to the amount in controversy,
and action instituted under this subsection by or against the
Secretary shall survive notwithstanding any change in the person
occupying the office of Secretary or any vacancy in that office; but
no attachment, injunction, garnishment, or other similar process,
mesne or final, shall be issued against the Secretary or property
under the Secretary's control and nothing herein shall be construed
to except litigation arising out of activities under this part from
the application of sections 509, 517, 547, and 2679 of title 28;
(3) include in any contract for Federal loan insurance such
terms, conditions, and covenants relating to repayment of principal
and payment of interest, relating to the Secretary's obligations and
rights to those of eligible lenders, and borrowers in case of
default, and relating to such other matters as the Secretary
determines to be necessary to assure that the purposes of this part
will be achieved; and any term, condition, and covenant made
pursuant to this paragraph or pursuant to any other provision of
this part may be modified by the Secretary, after notice and
opportunity for a hearing, if the Secretary finds that the
modification is necessary to protect the United States from the risk
of unreasonable loss;
(4) subject to the specific limitations in this part, consent to
modification, with respect to rate of interest, time of payment of
any installment of principal and interest or any portion thereof, or
any other provision of any note or other instrument evidencing a
loan which has been insured by the Secretary under this part;
(5) enforce, pay, or compromise, any claim on, or arising
because of, any such insurance or any guaranty agreement under
section 1078(c) of this title; and
(6) enforce, pay, compromise, waive, or release any right,
title, claim, lien, or demand, however acquired, including any
equity or any right of redemption.
(b) Financial operations responsibilities
The Secretary shall, with respect to the financial operations
arising by reason of this part prepare annually and submit a budget
program as provided for wholly owned Government corporations by chapter
91 of title 31. The transactions of the Secretary, including the
settlement of insurance claims and of claims for payments pursuant to
section 1078 of this title, and transactions related thereto and
vouchers approved by the Secretary in connection with such transactions,
shall be final and conclusive upon all accounting and other officers of
the Government.
(c) Data collection
(1) Collection by category of loan
(A) For loans insured after December 31, 1976, or in the case of
each insurer after such earlier date where the data required by this
subsection are available, the Secretary and all other insurers under
this part shall collect and accumulate all data relating to (i) loan
volume insured and (ii) defaults reimbursed or default rates
according to the categories of loans listed in subparagraph (B) of
this paragraph.
(B) The data indicated in subparagraph (A) of this paragraph
shall be accumulated according to the category of lender making the
loan and shall be accumulated separately for lenders who are (i)
eligible institutions, (ii) State or private, nonprofit direct
lenders, (iii) commercial financial institutions who are banks,
savings and loan associations, or credit unions, and (iv) all other
types of institutions or agencies.
(C) The Secretary may designate such additional subcategories
within the categories specified in subparagraph (B) of this
paragraph as the Secretary deems appropriate.
(D) The category or designation of a loan shall not be changed
for any reason, including its purchase or acquisition by a lender of
another category.
(2) Collection and reporting requirements
(A) The Secretary shall collect data under this subsection from
all insurers under this part and shall publish not less often than
once every fiscal year a report showing loan volume guaranteed and
default data for each category specified in subparagraph (B) of
paragraph (1) of this subsection and for the total of all lenders.
(B) The reports specified in subparagraph (A) of this paragraph
shall include a separate report for each insurer under this part
including the Secretary, and where an insurer insures loans for
lenders in more than one State, such insurer's report shall list all
data separately for each State.
(3) Institutional, public, or nonprofit lenders
For purposes of clarity in communications, the Secretary shall
separately identify loans made by the lenders referred to in clause
(i) and loans made by the lenders referred to in clause (ii) of
paragraph (1)(B) of this subsection.
(d) Delegation
(1) Regional offices
The functions of the Secretary under this part listed in
paragraph (2) of this subsection may be delegated to employees in
the regional office of the Department.
(2) Delegable functions
The functions which may be delegated pursuant to this subsection
are--
(A) reviewing applications for loan insurance under section
1079 of this title and issuing contracts for Federal loan
insurance, certificates of insurance, and certificates of
comprehensive insurance coverage to eligible lenders which are
financial or credit institutions subject to examination and
supervision by an agency of the United States or of any State;
(B) receiving claims for payments under section 1080(a) of
this title, examining those claims, and pursuant to regulations
of the Secretary, approving claims for payment, or requiring
lenders to take additional collection action as a condition for
payment of claims; and
(C) certifying to the central office when collection of
defaulted loans has been completed, compromising or agreeing to
the modification of any Federal claim against a borrower
(pursuant to regulations of the Secretary issued under
subsection (a) of this section), and recommending litigation
with respect to any such claim.
(e) Use of information on borrowers
Notwithstanding any other provision of law, the Secretary may
provide to eligible lenders, and to any guaranty agency having a
guaranty agreement under section 1078(c)(1) of this title, any
information with respect to the names and addresses of borrowers or
other relevant information which is available to the Secretary, from
whatever source such information may be derived.
(f) Audit of financial transactions
(1) Comptroller General and Inspector General authority
The Comptroller General and the Inspector General of the
Department of Education shall each have the authority to conduct an
audit of the financial transactions of--
(A) any guaranty agency operating under an agreement with
the Secretary pursuant to section 1078(b) of this title;
(B) any eligible lender as defined in section 1085(d)(1) of
this title;
(C) a representative sample of eligible lenders under this
part, upon the request of the Committee on Education and the
Workforce of the House of Representatives or the Committee on
Labor and Human Resources of the Senate, with respect to the
payment of the special allowance under section 1087-1 of this
title in order to evaluate the program authorized by this part.
(2) Access to records
For the purpose of carrying out this subsection, the records of
any entity described in subparagraph (A), (B), (C), or (D) \1\ of
paragraph (1) shall be available to the Comptroller General and the
Inspector General of the Department of Education. For the purpose of
section 716(c) of title 31, such records shall be considered to be
records to which the Comptroller General has access by law, and for
the purpose of section 6(a)(4) of the Inspector General Act of 1978,
such records shall be considered to be records necessary in the
performance of functions assigned by that Act to the Inspector
General.
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\1\ See References in Text note below.
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(3) ``Record'' defined
For the purpose of this subsection, the term ``record'' includes
any information, document, report, answer, account, paper, or other
data or documentary evidence.
(4) Audit procedures
In conducting audits pursuant to this subsection, the
Comptroller General and the Inspector General of the Department of
Education shall audit the records to determine the extent to which
they, at a minimum, comply with Federal statutes, and rules and
regulations prescribed by the Secretary, in effect at the time that
the record was made, and in no case shall the Comptroller General or
the Inspector General apply subsequently determined standards,
procedures, or regulations to the records of such agency, lender, or
Authority.
(g) Civil penalties
(1) Authority to impose penalties
Upon determination, after reasonable notice and opportunity for
a hearing, that a lender or a guaranty agency--
(A) has violated or failed to carry out any provision of
this part or any regulation prescribed under this part, or
(B) has engaged in substantial misrepresentation of the
nature of its financial charges,
the Secretary may impose a civil penalty upon such lender or agency
of not to exceed $25,000 for each violation, failure, or
misrepresentation.
(2) Limitations
No civil penalty may be imposed under paragraph (1) of this
subsection unless the Secretary determines that--
(A) the violation, failure, or substantial misrepresentation
referred to in that paragraph resulted from a violation,
failure, or misrepresentation that is material; and
(B) the lender or guaranty agency knew or should have known
that its actions violated or failed to carry out the provisions
of this part or the regulations thereunder.
(3) Correction of failure
A lender or guaranty agency has no liability under paragraph (1)
of this subsection if, prior to notification by the Secretary under
that paragraph, the lender or guaranty agency cures or corrects the
violation or failure or notifies the person who received the
substantial misrepresentation of the actual nature of the financial
charges involved.
(4) Consideration as single violation
For the purpose of paragraph (1) of this subsection, violations,
failures, or substantial misrepresentations arising from a specific
practice of a lender or guaranty agency, and occurring prior to
notification by the Secretary under that paragraph, shall be deemed
to be a single violation, failure, or substantial misrepresentation
even if the violation, failure, or substantial misrepresentation
affects more than one loan or more than one borrower, or both. The
Secretary may only impose a single civil penalty for each such
violation, failure, or substantial misrepresentation.
(5) Assignees not liable for violations by others
If a loan affected by a violation, failure, or substantial
misrepresentation is assigned to another holder, the lender or
guaranty agency responsible for the violation, failure, or
substantial misrepresentation shall remain liable for any civil
money penalty provided for under paragraph (1) of this subsection,
but the assignee shall not be liable for any such civil money
penalty.
(6) Compromise
Until a matter is referred to the Attorney General, any civil
penalty under paragraph (1) of this subsection may be compromised by
the Secretary. In determining the amount of such penalty, or the
amount agreed upon in compromise, the Secretary shall consider the
appropriateness of the penalty to the resources of the lender or
guaranty agency subject to the determination; the gravity of the
violation, failure, or substantial misrepresentation; the frequency
and persistence of the violation, failure, or substantial
misrepresentation; and the amount of any losses resulting from the
violation, failure, or substantial misrepresentation. The amount of
such penalty, when finally determined, or the amount agreed upon in
compromise, may be deducted from any sums owing by the United States
to the lender or agency charged, unless the lender or agency has, in
the case of a final agency determination, commenced proceedings for
judicial review within 90 days of the determination, in which case
the deduction may not be made during the pendency of the proceeding.
(h) Authority of the Secretary to impose and enforce limitations,
suspensions, and terminations
(1) Imposition of sanctions
(A) If the Secretary, after a reasonable notice and opportunity
for hearing to an eligible lender, finds that the eligible lender--
(i) has substantially failed--
(I) to exercise reasonable care and diligence in the
making and collecting of loans under the provisions of this
part,
(II) to make the reports or statements under section
1078(a)(4) of this title, or
(III) to pay the required loan insurance premiums to any
guaranty agency, or
(ii) has engaged in--
(I) fraudulent or misleading advertising or in
solicitations that have resulted in the making of loans
insured or guaranteed under this part to borrowers who are
ineligible; or
(II) the practice of making loans that violate the
certification for eligibility provided in section 1078 of
this title,
the Secretary shall limit, suspend, or terminate that lender from
participation in the insurance programs operated by guaranty
agencies under this part.
(B) The Secretary shall not lift any such limitation,
suspension, or termination until the Secretary is satisfied that the
lender's failure under subparagraph (A)(i) of this paragraph or
practice under subparagraph (A)(ii) of this paragraph has ceased and
finds that there are reasonable assurances that the lender will--
(i) exercise the necessary care and diligence,
(ii) comply with the requirements described in subparagraph
(A)(i), or
(iii) cease to engage in the practices described in
subparagraph (A)(ii),
as the case may be.
(2) Review of sanctions on lenders
(A) The Secretary shall review each limitation, suspension, or
termination imposed by any guaranty agency pursuant to section
1078(b)(1)(U) of this title within 60 days after receipt by the
Secretary of a notice from the guaranty agency of the imposition of
such limitation, suspension, or termination, unless the right to
such review is waived in writing by the lender. The Secretary shall
uphold the imposition of such limitation, suspension, or termination
in the student loan insurance program of each of the guaranty
agencies under this part, and shall notify such guaranty agencies of
such sanction--
(i) if such review is waived; or
(ii) if such review is not waived, unless the Secretary
determines that the limitation, suspension, or termination was
not imposed in accordance with requirements of such section.
(B) The Secretary's review under this paragraph of the
limitation, suspension, or termination imposed by a guaranty agency
pursuant to section 1078(b)(1)(U) of this title shall be limited
to--
(i) a review of the written record of the proceedings in
which the guaranty agency imposed such sanctions; and
(ii) a determination as to whether the guaranty agency
complied with section 1078(b)(1)(U) of this title and any notice
and hearing requirements prescribed in regulations of the
Secretary under this part.
(C) The Secretary shall not lift any such sanction until the
Secretary is satisfied that the lender has corrected the failures
which led to the limitation, suspension, or termination, and finds
that there are reasonable assurances that the lender will, in the
future, comply with the requirements of this part. The Secretary
shall notify each guaranty agency of the lifting of any such
sanction.
(3) Review of sanctions on eligible institutions
(A) The Secretary shall review each limitation, suspension, or
termination imposed by any guaranty agency pursuant to section
1078(b)(1)(T) of this title within 60 days after receipt by the
Secretary of a notice from the guaranty agency of the imposition of
such limitation, suspension, or termination, unless the right to
such review is waived in writing by the institution. The Secretary
shall uphold the imposition of such limitation, suspension, or
termination in the student loan insurance program of each of the
guaranty agencies under this part, and shall notify such guaranty
agencies of such sanctions--
(i) if such review is waived; or
(ii) if such review is not waived, unless the Secretary
determines that the limitation, suspension, or termination was
not imposed in accordance with requirements of such section.
(B) The Secretary's review under this paragraph of the
limitation, suspension, or termination imposed by a guaranty agency
pursuant to section 1078(b)(1)(T) of this title shall be limited
to--
(i) a review of the written record of the proceedings in
which the guaranty agency imposed such sanctions; and
(ii) a determination as to whether the guaranty agency
complied with section 1078(b)(1)(T) of this title and any notice
and hearing requirements prescribed in regulations of the
Secretary under this part.
(C) The Secretary shall not lift any such sanction until the
Secretary is satisfied that the institution has corrected the
failures which led to the limitation, suspension, or termination,
and finds that there are reasonable assurances that the institution
will, in the future, comply with the requirements of this part. The
Secretary shall notify each guaranty agency of the lifting of any
such sanction.
(i) Authority to sell defaulted loans
In the event that all other collection efforts have failed, the
Secretary is authorized to sell defaulted student loans assigned to the
United States under this part to collection agencies, eligible lenders,
guaranty agencies, or other qualified purchaser on such terms as the
Secretary determines are in the best financial interests of the United
States. A loan may not be sold pursuant to this subsection if such loan
is in repayment status.
(j) Authority of Secretary to take emergency actions against lenders
(1) Imposition of sanctions
If the Secretary--
(A) receives information, determined by the Secretary to be
reliable, that a lender is violating any provision of this
subchapter and part C of subchapter I of chapter 34 of title 42,
any regulation prescribed under this subchapter and part C of
subchapter I of chapter 34 of title 42, or any applicable
special arrangement, agreement, or limitation;
(B) determines that immediate action is necessary to prevent
misuse of Federal funds; and
(C) determines that the likelihood of loss outweighs the
importance of following the limitation, suspension, or
termination procedures authorized in subsection (h) of this
section;
the Secretary shall, effective on the date on which a notice and
statement of the basis of the action is mailed to the lender (by
registered mail, return receipt requested), take emergency action to
stop the issuance of guarantee commitments and the payment of
interest benefits and special allowance to the lender.
(2) Length of emergency action
An emergency action under this subsection may not exceed 30 days
unless a limitation, suspension, or termination proceeding is
initiated against the lender under subsection (h) of this section
before the expiration of that period.
(3) Opportunity to show cause
The Secretary shall provide the lender, if it so requests, an
opportunity to show cause that the emergency action is unwarranted.
(k) Program of assistance for borrowers
(1) In general
The Secretary shall undertake a program to encourage
corporations and other private and public employers, including the
Federal Government, to assist borrowers in repaying loans received
under this subchapter and part C of subchapter I of chapter 34 of
title 42, including providing employers with options for payroll
deduction of loan payments and offering loan repayment matching
provisions as part of employee benefit packages.
(2) Publication
The Secretary shall publicize models for providing the repayment
assistance described in paragraph (1) and each year select entities
that deserve recognition, through means devised by the Secretary,
for the development of innovative plans for providing such
assistance to employees.
(3) Recommendation
The Secretary shall recommend to the appropriate committees in
the Senate and House of Representatives changes to statutes that
could be made in order to further encourage such efforts.
(l) Uniform administrative and claims procedures
(1) In general
The Secretary shall, by regulation developed in consultation
with guaranty agencies, lenders, institutions of higher education,
secondary markets, students, third party servicers and other
organizations involved in providing loans under this part, prescribe
standardized forms and procedures regarding--
(A) origination of loans;
(B) electronic funds transfer;
(C) guaranty of loans;
(D) deferments;
(E) forbearance;
(F) servicing;
(G) claims filing;
(H) borrower status change; and
(I) cures.
(2) Special rules
(A) The forms and procedures described in paragraph (1) shall
include all aspects of the loan process as such process involves
eligible lenders and guaranty agencies and shall be designed to
minimize administrative costs and burdens (other than the costs and
burdens involved in the transition to new forms and procedures)
involved in exchanges of data to and from borrowers, schools,
lenders, secondary markets, and the Department.
(B) Nothing in this paragraph shall be construed to limit the
development of electronic forms and procedures.
(3) Simplification requirements
Such regulations shall include--
(A) standardization of computer formats, forms design, and
guaranty agency procedures relating to the origination,
servicing, and collection of loans made under this part;
(B) authorization of alternate means of document retention,
including the use of microfilm, microfiche, laser disc, compact
disc, and other methods allowing the production of a facsimile
of the original documents;
(C) authorization of the use of computer or similar
electronic methods of maintaining records relating to the
performance of servicing, collection, and other regulatory
requirements under this chapter; and
(D) authorization and implementation of electronic data
linkages for the exchange of information to and from lenders,
guarantors, institutions of higher education, third party
servicers, and the Department of Education for student status
confirmation reports, claim filing, interest and special
allowance billing, deferment processing, and all other
administrative steps relating to loans made pursuant to this
part where using electronic data linkage is feasible.
(4) Additional recommendations
The Secretary shall review regulations prescribed pursuant to
paragraph (1) and seek additional recommendations from guaranty
agencies, lenders, institutions of higher education, students,
secondary markets, third party servicers and other organizations
involved in providing loans under this part, not less frequently
than annually, for additional methods of simplifying and
standardizing the administration of the programs authorized by this
part.
(m) Common forms and formats
(1) Common guaranteed student loan application form and
promissory note
(A) In general
The Secretary, in cooperation with representatives of
guaranty agencies, eligible lenders, and organizations involved
in student financial assistance, shall prescribe common
application forms and promissory notes, or master promissory
notes, to be used for applying for loans under this part.
(B) Requirements
The forms prescribed by the Secretary shall--
(i) use clear, concise, and simple language to
facilitate understanding of loan terms and conditions by
applicants;
(ii) be formatted to require the applicant to clearly
indicate a choice of lender; and \2\
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\2\ So in original. The ``; and'' probably should be a period.
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(C) Free application form
For academic year 1999-2000 and succeeding academic years,
the Secretary shall prescribe the form developed under section
1090 of this title as the application form under this part,
other than for loans under sections 1078-2 and 1078-3 of this
title.
(D) Master promissory note
(i) In general
The Secretary shall develop and require the use of
master promissory note forms for loans made under this part
and part C of this subchapter. Such forms shall be available
for periods of enrollment beginning not later than July 1,
2000. Each form shall allow eligible borrowers to receive,
in addition to initial loans, additional loans for the same
or subsequent periods of enrollment through a student
confirmation process approved by the Secretary. Such forms
shall be used for loans made under this part or part C of
this subchapter as directed by the Secretary.
(ii) Consultation
In developing the master promissory note under this
subsection, the Secretary shall consult with representatives
of guaranty agencies, eligible lenders, institutions of
higher education, students, and organizations involved in
student financial assistance.
(iii) Sale; assignment; enforceability
Notwithstanding any other provision of law, each loan
made under a master promissory note under this subsection
may be sold or assigned independently of any other loan made
under the same promissory note and each such loan shall be
separately enforceable in all Federal and State courts on
the basis of an original or copy of the master promissory
note in accordance with the terms of the master promissory
note.
(E) Perfection of security interests in student loans
(i) In general
Notwithstanding the provisions of any State law to the
contrary, including the Uniform Commercial Code as in effect
in any State, a security interest in loans made under this
part, on behalf of any eligible lender (as defined in
section 1085(d) of this title) shall attach, be perfected,
and be assigned priority in the manner provided by the
applicable State's law for perfection of security interests
in accounts, as such law may be amended from time to time
(including applicable transition provisions). If any such
State's law provides for a statutory lien to be created in
such loans, such statutory lien may be created by the entity
or entities governed by such State law in accordance with
the applicable statutory provisions that created such a
statutory lien.
(ii) Collateral description
In addition to any other method for describing
collateral in a legally sufficient manner permitted under
the laws of the State, the description of collateral in any
financing statement filed pursuant to this subparagraph
shall be deemed legally sufficient if it lists such loans,
or refers to records (identifying such loans) retained by
the secured party or any designee of the secured party
identified in such financing statement, including the debtor
or any loan servicer.
(iii) Sales
Notwithstanding clauses (i) and (ii) and any provisions
of any State law to the contrary, other than any such
State's law providing for creation of a statutory lien, an
outright sale of loans made under this part shall be
effective and perfected automatically upon attachment as
defined in the Uniform Commercial Code of such State.
(2) Common deferment form
The Secretary, in cooperation with representatives of guaranty
agencies, institutions of higher education, and lenders involved in
loans made under this part, shall prescribe a common deferment
reporting form to be used for the processing of deferments of loans
made under this subchapter and part C of subchapter I of chapter 34
of title 42.
(3) Common reporting formats
The Secretary shall promulgate standards including necessary
rules, regulations (including the definitions of all relevant
terms), and procedures so as to require all lenders and guaranty
agencies to report information on all aspects of loans made under
this part in uniform formats, so as to permit the direct comparison
of data submitted by individual lenders, servicers, or guaranty
agencies.
(4) Electronic forms
Nothing in this section shall be construed to limit the
development and use of electronic forms and procedures.
(n) Default reduction management
(1) Authorization
There are authorized to be appropriated $25,000,000 for fiscal
year 1999 and each of the four succeeding fiscal years, for the
Secretary to expend for default reduction management activities for
the purposes of establishing a performance measure that will reduce
defaults by 5 percent relative to the prior fiscal year. Such funds
shall be in addition to, and not in lieu of, other appropriations
made for such purposes.
(2) Allowable activities
Allowable activities for which such funds shall be expended by
the Secretary shall include the following: (A) program reviews; (B)
audits; (C) debt management programs; (D) training activities; and
(E) such other management improvement activities approved by the
Secretary.
(3) Plan for use required
The Secretary shall submit a plan, for inclusion in the
materials accompanying the President's budget each fiscal year,
detailing the expenditure of funds authorized by this section to
accomplish the 5 percent reduction in defaults. At the conclusion of
the fiscal year, the Secretary shall report the Secretary's findings
and activities concerning the expenditure of funds and whether the
performance measure was met. If the performance measure was not met,
the Secretary shall report the following:
(A) why the goal was not met, including an indication of any
managerial deficiencies or of any legal obstacles;
(B) plans and a schedule for achieving the established
performance goal;
(C) recommended legislative or regulatory changes necessary
to achieve the goal; and
(D) if the performance standard or goal is impractical or
infeasible, why that is the case and what action is recommended,
including whether the goal should be changed or the program
altered or eliminated.
This report shall be submitted to the Appropriations Committees of
the House of Representatives and the Senate and to the Committee on
Education and the Workforce of the House of Representatives and the
Committee on Labor and Human Resources of the Senate.
(o) Consequences of guaranty agency insolvency
In the event that the Secretary has determined that a guaranty
agency is unable to meet its insurance obligations under this part, the
holder of loans insured by the guaranty agency may submit insurance
claims directly to the Secretary and the Secretary shall pay to the
holder the full insurance obligation of the guaranty agency, in
accordance with insurance requirements no more stringent than those of
the guaranty agency. Such arrangements shall continue until the
Secretary is satisfied that the insurance obligations have been
transferred to another guarantor who can meet those obligations or a
successor will assume the outstanding insurance obligations.
(p) Reporting requirement
All officers and directors, and those employees and paid consultants
of eligible institutions, eligible lenders, guaranty agencies, loan
servicing agencies, accrediting agencies or associations, State
licensing agencies or boards, and entities acting as secondary markets
(including the Student Loan Marketing Association), who are engaged in
making decisions as to the administration of any program or funds under
this subchapter and part C of subchapter I of chapter 34 of title 42 or
as to the eligibility of any entity or individual to participate under
this subchapter and part C of subchapter I of chapter 34 of title 42,
shall report to the Secretary, in such manner and at such time as the
Secretary shall require, on any financial interest which such individual
may hold in any other entity participating in any program assisted under
this subchapter and part C of subchapter I of chapter 34 of title 42.
(Pub. L. 89-329, title IV, Sec. 432, as added Pub. L. 99-498, title IV,
Sec. 402(a), Oct. 17, 1986, 100 Stat. 1401; amended Pub. L. 100-50,
Sec. 10(x), (y), June 3, 1987, 101 Stat. 346; Pub. L. 101-239, title II,
Sec. 2006(a), Dec. 19, 1989, 103 Stat. 2118; Pub. L. 102-325, title IV,
Sec. 425, July 23, 1992, 106 Stat. 543; Pub. L. 103-208, Sec. 2(k)(2),
(3), Dec. 20, 1993, 107 Stat. 2485; Pub. L. 104-66, title I,
Sec. 1042(e), Dec. 21, 1995, 109 Stat. 716; Pub. L. 105-244, title IV,
Sec. 427, Oct. 7, 1998, 112 Stat. 1702; Pub. L. 106-554, Sec. 1(a)(1)
[title III, Sec. 311], Dec. 21, 2000, 114 Stat. 2763, 2763A-46.)
References in Text
Subparagraph (D) of paragraph (1) of subsec. (f), referred to in
subsec. (f)(2), was repealed by Pub. L. 105-244, title IV,
Sec. 427(a)(3), Oct. 7, 1998, 112 Stat. 1702.
The Inspector General Act of 1978, referred to in subsec. (f)(2), is
Pub. L. 95-452, Oct. 12, 1978, 92 Stat. 1101, as amended, which is set
out in the Appendix to Title 5, Government Organization and Employees.
This chapter, referred to in subsec. (l)(3)(C), 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 1082, Pub. L. 89-329, title IV, Sec. 432, Nov. 8,
1965, 79 Stat. 1246; Pub. L. 90-460, Sec. 3(d), Aug. 3, 1968, 82 Stat.
638; Pub. L. 93-604, title VII, Sec. 705(a), Jan. 2, 1975, 88 Stat.
1964; Pub. L. 94-482, title I, Sec. 127(a), Oct. 12, 1976, 90 Stat.
2127; Pub. L. 96-88, title III, Sec. 301(b)(2), Oct. 17, 1979, 93 Stat.
678; Pub. L. 96-374, title IV, Sec. 416(c), title XIII, Sec. 1391(a)(1),
Oct. 3, 1980, 94 Stat. 1421, 1503; Pub. L. 99-272, title XVI,
Sec. 16024, Apr. 7, 1986, 100 Stat. 351, related to functions, powers,
and duties of Secretary, prior to the general revision of this part by
Pub. L. 99-498.
Amendments
2000--Subsec. (m)(1)(D)(iv). Pub. L. 106-554, Sec. 1(a)(1) [title
III, Sec. 311(1)], struck out heading and text of cl. (iv). Text read as
follows: ``Notwithstanding the provisions of any State law to the
contrary, including the Uniform Commercial Code as in effect in any
State, a security interest in loans made under this part created on
behalf of any eligible lender as defined in section 1085(d) of this
title may be perfected either through the taking of possession of such
loans (which can be through taking possession of an original or copy of
the master promissory note) or by the filing of notice of such security
interest in such loans in the manner provided by such State law for
perfection of security interests in accounts.''
Subsec. (m)(1)(E). Pub. L. 106-554, Sec. 1(a)(1) [title III,
Sec. 311(2)], added subpar. (E).
1998--Subsec. (f)(1)(B). Pub. L. 105-244, Sec. 427(a)(1),
substituted ``section 1085(d)(1)'' for ``section 1085(d)(1)(D), (F), or
(H)''.
Subsec. (f)(1)(C). Pub. L. 105-244, Sec. 427(a)(2), substituted
``and the Workforce'' for ``and Labor'' and a period for ``; and'' at
end.
Subsec. (f)(1)(D). Pub. L. 105-244, Sec. 427(a)(3), struck out
subpar. (D) which read as follows: ``any Authority required to file a
plan for doing business under section 1087-1(d) of this title.''
Subsec. (k)(3). Pub. L. 105-244, Sec. 427(b), substituted ``The
Secretary'' for ``Within 1 year after July 23, 1992, the Secretary''.
Subsec. (m)(1)(A). Pub. L. 105-244, Sec. 427(c)(1)(A), substituted
``common application forms and promissory notes, or master promissory
notes,'' for ``a common application form and promissory note''.
Subsec. (m)(1)(B). Pub. L. 105-244, Sec. 427(c)(1)(B), substituted
``The forms'' for ``The form'' in introductory provisions and struck out
cl. (iii) which read as follows: ``permit, to the maximum extent
practicable, application for any loan under this part.''
Subsec. (m)(1)(C). Pub. L. 105-244, Sec. 427(c)(1)(C), amended
heading and text of subpar. (C) generally. Prior to amendment, text read
as follows: ``The Secretary shall approve a form for use not later than
360 days after July 23, 1992.''
Subsec. (m)(1)(D). Pub. L. 105-244, Sec. 427(c)(1)(D), amended
heading and text of subpar. (D) generally. Prior to amendment, text read
as follows: ``Nothing in this section shall be construed to limit the
development of electronic forms and procedures.''
Subsec. (m)(4). Pub. L. 105-244, Sec. 427(c)(2), added par. (4).
Subsec. (n)(1). Pub. L. 105-244, Sec. 427(d)(1), substituted
``1999'' for ``1993''.
Subsec. (n)(3). Pub. L. 105-244, Sec. 427(d)(2), substituted ``and
the Workforce'' for ``and Labor'' in concluding provisions.
Subsec. (p). Pub. L. 105-244, Sec. 427(e), struck out ``State
postsecondary reviewing entities designated under subpart 1 of part G of
this subchapter,'' after ``agencies or boards,''.
1995--Subsec. (b). Pub. L. 104-66 amended heading and text of
subsec. (b) generally. Prior to amendment, text read as follows: ``The
Secretary shall, with respect to the financial operations arising by
reason of this part--
``(1) prepare annually and submit a budget program as provided
for wholly owned Government corporations by chapter 91 of title 31;
and
``(2) maintain with respect to insurance under this part an
integral set of accounts and prepare financial statements in
accordance with generally accepted accounting principles, which
shall be audited annually by the General Accounting Office in
conformity with generally accepted Government auditing standards
except that the transactions of the Secretary, including the
settlement of insurance claims and of claims for payments pursuant
to section 1078 of this title, and transactions related thereto and
vouchers approved by the Secretary in connection with such
transactions, shall be final and conclusive upon all accounting and
other officers of the Government.''
1993--Subsec. (h)(2)(A), (3)(A). Pub. L. 103-208 amended directory
language of Pub. L. 102-325, Sec. 425(d)(1). See 1992 Amendment notes
below.
1992--Subsec. (a)(1). Pub. L. 102-325, Sec. 425(a), inserted before
semicolon at end ``, including regulations applicable to third party
servicers (including regulations concerning financial responsibility
standards for, and the assessment of liabilities for program violations
against, such servicers) to establish minimum standards with respect to
sound management and accountability of programs under this part, except
that in no case shall damages be assessed against the United States for
the actions or inactions of such servicers''.
Subsecs. (a)(3), (g)(1). Pub. L. 102-325, Sec. 425(b)(1), (2),
struck out ``on the record'' after ``for a hearing''.
Subsec. (g)(2). Pub. L. 102-325, Sec. 425(c)(1), amended par. (2)
generally. Prior to amendment, par. (2) read as follows: ``No civil
penalty may be imposed under paragraph (1) of this subsection unless it
is determined that the violation, failure, or substantial
misrepresentation referred to in that paragraph resulted from--
``(A)(i) a clear and consistent pattern or practice of
violations, failures, or substantial misrepresentations in which the
lender or guaranty agency did not maintain procedures reasonably
adapted to avoid the violation, failure, or substantial
misrepresentation;
``(ii) gross negligence; or
``(iii) willful actions on the part of the lender or guaranty
agency; and
``(B) the violation, failure, or substantial misrepresentation
is material.''
Subsec. (g)(3). Pub. L. 102-325, Sec. 425(c)(2), substituted
``notification by the Secretary under that paragraph'' for ``the
institution of an action under that paragraph''.
Subsec. (g)(4). Pub. L. 102-325, Sec. 425(c)(3), inserted ``, and
occurring prior to notification by the Secretary under that paragraph,''
after ``guaranty agency'' and substituted ``or both. The'' for ``or
both, and the''.
Subsec. (h)(2)(A). Pub. L. 102-325, Sec. 425(d)(1), as amended by
Pub. L. 103-208, Sec. 2(k)(2), in second sentence substituted ``The
Secretary shall uphold the imposition of such limitation, suspension, or
termination in the student loan insurance program of each of the
guaranty agencies under this part, and shall notify such guaranty
agencies of such sanction'' for ``The Secretary shall disqualify such
lender from participation in the student loan insurance program of each
of the guaranty agencies under this part, and notify such guaranty
agencies of such disqualification''.
Pub. L. 102-325, Sec. 425(b)(3), in first sentence struck out ``, in
accordance with sections 556 and 557 of title 5,'' after ``The Secretary
shall''.
Subsec. (h)(2)(B), (C). Pub. L. 102-325, Sec. 425(d)(2), (3), added
subpar. (B), redesignated former subpar. (B) as (C), and substituted
``sanction'' for ``disqualification'' in two places.
Subsec. (h)(3)(A). Pub. L. 102-325, Sec. 425(d)(4), as amended by
Pub. L. 103-208, Sec. 2(k)(3), in second sentence substituted ``The
Secretary shall uphold the imposition of such limitation, suspension, or
termination in the student loan insurance program of each of the
guaranty agencies under this part, and shall notify such guaranty
agencies of such sanctions'' for ``The Secretary shall disqualify such
institution from participation in the student loan insurance program of
each of the guaranty agencies under this part, and notify such guaranty
agencies of such disqualification''.
Pub. L. 102-325, Sec. 425(b)(4), in first sentence struck out ``, in
accordance with sections 556 and 557 of title 5,'' after ``The Secretary
shall''.
Subsec. (h)(3)(B), (C). Pub. L. 102-325, Sec. 425(d)(5), (6), added
subpar. (B), redesignated former subpar. (B) as (C), and substituted
``sanction'' for ``disqualification'' in two places.
Subsecs. (k) to (p). Pub. L. 102-325, Sec. 425(e), added subsecs.
(k) to (p).
1989--Subsec. (j). Pub. L. 101-239 added subsec. (j).
1987--Subsec. (f)(4). Pub. L. 100-50, Sec. 10(x), added par. (4).
Subsec. (g)(2)(A)(i), (B). Pub. L. 100-50, Sec. 10(y), substituted
``misrepresentation'' for ``representation''.
Change of Name
Committee on Labor and Human Resources of Senate changed to
Committee on Health, Education, Labor, and Pensions of Senate by Senate
Resolution No. 20, One Hundred Sixth Congress, Jan. 19, 1999.
Effective Date of 1998 Amendment
Amendment by Pub. L. 105-244 effective Oct. 1, 1998, except as
otherwise provided in Pub. L. 105-244, see section 3 of Pub. L. 105-244,
set out as a note under section 1001 of this title.
Effective Date of 1993 Amendment
Amendment by Pub. L. 103-208 effective as if included in the Higher
Education Amendments of 1992, Pub. L. 102-325, except as otherwise
provided, see section 5(a) of Pub. L. 103-208, set out as a note under
section 1051 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.