§1078–1 Voluntary Flexible Agreements with Guaranty Agencies

Summary

The Secretary may make voluntary, flexible deals with guaranty agencies instead of the usual agreements under section 1078(b) and (c). At first, in fiscal years 1999, 2000, and 2001, no more than 6 agencies that had agreements as of the day before October 7, 1998 could get such deals. Starting in fiscal year 2002, any guaranty agency or group of agencies may join. The Secretary can waive or change many normal rules for these deals, but cannot change rules about loan terms or payments on defaulted loans, cannot lift the ban on inducements in section 1078(b)(3), and cannot remove the Federal default fee required by section 1078(b)(1)(H) and the second sentence of section 1078–8(h). Each deal must be written case by case with the agency. It must say what the agency will do (for example, handle loan insurance, watch commitments, try to prevent defaults, review and pay claims, collect loans, keep good accounting and reports, monitor schools and lenders, and do outreach), how fees and other money will work, how performance will be measured and what happens if goals are missed, when the deal can end early, and steps to protect the government from unreasonable loss. The Secretary must publish an invitation and selection rules in the Federal Register and must tell the authorizing committees 30 days before finalizing or changing a deal or giving certain waivers. Each year the Secretary must report to those committees on program results, consumer education, and aid delivery, and include descriptions of each agreement, goals, lists of agencies and waivers, performance standards and results, fee and cost analyses, and promising practices. The full texts of the agreements and related waivers must be public. When a deal ends, the agency returns to its prior agreements under section 1078(b) and (c), subject to any needed steps to transfer duties and meet reserve rules in sections 1072 and 1078.