20 U.S.C. § 1082
In the performance of, and with respect to, the functions, powers, and duties, vested in him by this part, the Secretary may-
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. The Secretary may not enter into any settlement of any claim under this subchapter that exceeds $1,000,000 unless-
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.
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.
The functions which may be delegated pursuant to this subsection are-
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.
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-
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 406(a)(4) of title 5, such records shall be considered to be records necessary in the performance of functions assigned by chapter 4 of title 5 to the Inspector General.
For the purpose of this subsection, the term "record" includes any information, document, report, answer, account, paper, or other data or documentary evidence.
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.
Upon determination, after reasonable notice and opportunity for a hearing, that a lender or a guaranty agency-
the Secretary may impose a civil penalty upon such lender or agency of not to exceed $25,000 for each violation, failure, or misrepresentation.
No civil penalty may be imposed under paragraph (1) of this subsection unless the Secretary determines that-
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.
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.
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.
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.
the Secretary shall limit, suspend, or terminate that lender from participation in the insurance programs operated by guaranty agencies under this part.
as the case may be.
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.
If the Secretary-
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.
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) before the expiration of that period.
The Secretary shall provide the lender, if it so requests, an opportunity to show cause that the emergency action is unwarranted.
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, including providing employers with options for payroll deduction of loan payments and offering loan repayment matching provisions as part of employee benefit packages.
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.
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.
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-
Such regulations shall include-
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.
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.
The forms prescribed by the Secretary shall-
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.
The Secretary shall develop and require the use of master promissory note forms for loans made under this part and part D. 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 D as directed by the Secretary. Unless otherwise notified by the Secretary, each institution of higher education that participates in the program under this part or part D may use a master promissory note for loans under this part and part D.
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.
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.
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.
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.
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.
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.
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.
Nothing in this section shall be construed to limit the development and use of electronic forms and procedures.
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.
Allowable activities for which such funds shall be expended by the Secretary shall include the following:
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:
This report shall be submitted to the Appropriations Committees of the House of Representatives and the Senate and to the authorizing committees.
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.
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 or as to the eligibility of any entity or individual to participate under this subchapter, 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.
1 See References in Text note below.
20 U.S.C. § 1082
EDITORIAL NOTES
REFERENCES IN TEXTSubparagraph (D) of paragraph (1) of subsec. (f), referred to in subsec. (f)(2), was repealed by Pub. L. 105-244, §427, 112 Stat. 1702.
PRIOR PROVISIONSA prior section 1082, Pub. L. 89-329, title IV, §432, Nov. 8, 1965, 79 Stat. 1246; Pub. L. 90-460, §3(d), Aug. 3, 1968, 82 Stat. 638; Pub. L. 93-604, title VII, §705(a), Jan. 2, 1975, 88 Stat. 1964; Pub. L. 94-482, title I, §127(a), Oct. 12, 1976, 90 Stat. 2127; Pub. L. 96-88, title III, §301(b)(2), Oct. 17, 1979, 93 Stat. 678; Pub. L. 96-374, title IV, §416(c), title XIII, §1391(a)(1), Oct. 3, 1980, 94 Stat. 1421, 1503; Pub. L. 99-272, title XVI, §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.
AMENDMENTS2022-Subsec. (f)(2). Pub. L. 117-286 substituted "section 406(a)(4) of title 5," for "section 6(a)(4) of the Inspector General Act of 1978," and "chapter 4 of title 5" for "that Act".2009-Subsec. (b). Pub. L. 111-39, §402(f)(9)(A), made technical amendment to reference in original act which appears in text as reference to section 1078 of this title. Subsec. (m)(1)(B). Pub. L. 111-39, §402(f)(9)(B), in cl. (i), inserted "and" at end and, in cl. (ii), substituted period for "; and". 2008-Subsec. (b). Pub. L. 110-315, §433(a), inserted at end "The Secretary may not enter into any settlement of any claim under this subchapter that exceeds $1,000,000 unless-" and pars. (1) and (2). Subsec. (f)(1)(C). Pub. L. 110-315, §103(b)(6)(A), substituted "either of the authorizing committees" for "the Committee on Education and the Workforce of the House of Representatives or the Committee on Labor and Human Resources of the Senate". Subsec. (m)(1)(D)(i). Pub. L. 110-315, §433(b), inserted at end "Unless otherwise notified by the Secretary, each institution of higher education that participates in the program under this part or part D may use a master promissory note for loans under this part and part D." Subsec. (n)(3). Pub. L. 110-315, §103(b)(6)(B), substituted "authorizing committees" for "Committee on Education and the Workforce of the House of Representatives and the Committee on Labor and Human Resources of the Senate" in concluding provisions. 2006-Subsec. (l)(1)(H). Pub. L. 109-171 inserted "and anticipated graduation date" after "status change". 2000-Subsec. (m)(1)(D)(iv). Pub. L. 106-554, §1(a)(1) [title III, §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, §1(a)(1) [title III, §311(2)], added subpar. (E). 1998-Subsec. (f)(1)(B). Pub. L. 105-244, §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, §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, §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, §427(b), substituted "The Secretary" for "Within 1 year after July 23, 1992, the Secretary". Subsec. (m)(1)(A). Pub. L. 105-244, §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, §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, §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, §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, §427(c)(2), added par. (4).Subsec. (n)(1). Pub. L. 105-244, §427(d)(1), substituted "1999" for "1993". Subsec. (n)(3). Pub. L. 105-244, §427(d)(2), substituted "and the Workforce" for "and Labor" in concluding provisions.Subsec. (p). Pub. L. 105-244, §427(e), struck out "State postsecondary reviewing entities designated under subpart 1 of part H," 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, §425(d)(1) . See 1992 Amendment notes below. 1992-Subsec. (a)(1). Pub. L. 102-325, §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, §425(b)(1), (2), struck out "on the record" after "for a hearing". Subsec. (g)(2). Pub. L. 102-325, §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, §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, §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, §425(d)(1), as amended by Pub. L. 103-208, §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, §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, §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, §425(d)(4), as amended by Pub. L. 103-208, §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, §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, §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, §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, §10(x), added par. (4).Subsec. (g)(2)(A)(i), (B). Pub. L. 100-50, §10(y), substituted "misrepresentation" for "representation".
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 2009 AMENDMENT Amendment by Pub. L. 111-39 effective as if enacted on the date of enactment of Pub. L. 110-315 (Aug. 14, 2008), see section 3 of Pub. L. 111-39, set out as a note under section 1001 of this title.
EFFECTIVE DATE OF 2006 AMENDMENT Amendment by Pub. L. 109-171 effective July 1, 2006, except as otherwise provided, see section 8001(c) of Pub. L. 109-171, set out as a note under section 1002 of this title.
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.