---
kind: "section"
citation: "20 U.S.C. § 1072b"
title: "20"
title_heading: "Education"
number: "1072b"
heading: "Agency Operating Fund"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/20/1072b"
units:
  - "Chapter 28 — Higher Education Resources and Student Assistance"
  - "Subchapter IV — Student Assistance"
  - "Part B — Federal Family Education Loan Program"
---

# §1072b. Agency Operating Fund

- (a) **Establishment—** Each [guaranty agency](/usc/20/1085.md?p=j) shall, not later than 60 days after October 7, 1998, establish a fund designated as the Operating Fund.
- (b) **Investment of funds—** Funds deposited into the Operating Fund shall be invested at the discretion of the [guaranty agency](/usc/20/1085.md?p=j) in accordance with prudent investor standards.
- (c) **Additional deposits—** After the establishment of the Operating Fund, the [guaranty agency](/usc/20/1085.md?p=j) shall deposit into the Operating Fund—
  - (1) the [loan](/usc/20/1066a.md?p=2) processing and issuance fee paid by the [Secretary](/usc/20/1003.md?p=17) pursuant to [section 1078(f) of this title](/usc/20/1078.md?p=f);
  - (2) 30 percent of amounts received after October 7, 1998, from the [Secretary](/usc/20/1003.md?p=17) as payment for administrative cost allowances for [loans](/usc/20/1066a.md?p=2) upon which insurance was issued prior to October 7, 1998;
  - (3) the account maintenance fee paid by the [Secretary](/usc/20/1003.md?p=17) in accordance with [section 1087h of this title](/usc/20/1087h.md);
  - (4) the [default](/usc/20/1085.md?p=l) aversion fee paid in accordance with [section 1078(l)](/usc/20/1078.md?p=l) of this title;
  - (5) amounts remaining pursuant to [section 1078(c)(6)(B)](/usc/20/1078.md?p=c-6-B)[^1] of this title from collection on defaulted [loans](/usc/20/1066a.md?p=2) held by the agency, after payment of the [Secretary](/usc/20/1003.md?p=17)’s equitable share, excluding amounts deposited in the Federal Fund pursuant to [section 1072a(c)(2) of this title](/usc/20/1072a.md?p=c-2); and
  - (6) other receipts as specified in regulations of the [Secretary](/usc/20/1003.md?p=17).
- (d) **Uses of funds—**
  - (1) **In general—** Funds in the Operating Fund shall be used for application processing, [loan](/usc/20/1066a.md?p=2) disbursement, enrollment and repayment status management, [default](/usc/20/1085.md?p=l) aversion activities (including those described in [section 1072(h)(8) of this title](/usc/20/1072.md?p=h-8)), [default](/usc/20/1085.md?p=l) collection activities, school and [lender](/usc/20/1019.md?p=6) training, financial aid awareness and related outreach activities, compliance monitoring, and other student financial aid related activities, as selected by the [guaranty agency](/usc/20/1085.md?p=j).
  - (2) **Special rule—** The [guaranty agency](/usc/20/1085.md?p=j) may, in the agency’s discretion, transfer funds from the Operating Fund to the Federal Fund for use pursuant to [section 1072a of this title](/usc/20/1072a.md). Such transfer shall be irrevocable, and any funds so transferred shall become the sole property of the United States.
  - (3) **Definitions—** For purposes of this subsection:
    - (A) **Default collection activities—** The term “[default](/usc/20/1085.md?p=l) collection activities” means activities of a [guaranty agency](/usc/20/1085.md?p=j) that are directly related to the collection of the [loan](/usc/20/1066a.md?p=2) on which a [default](/usc/20/1085.md?p=l) claim has been paid to the participating [lender](/usc/20/1019.md?p=6), including the [due diligence](/usc/20/1085.md?p=f) activities required pursuant to regulations of the [Secretary](/usc/20/1003.md?p=17).
    - (B) **Default aversion activities—** The term “[default](/usc/20/1085.md?p=l) aversion activities” means activities of a [guaranty agency](/usc/20/1085.md?p=j) that are directly related to providing collection assistance to the [lender](/usc/20/1019.md?p=6) on a delinquent [loan](/usc/20/1066a.md?p=2), prior to the [loan](/usc/20/1066a.md?p=2)’s being legally in a [default](/usc/20/1085.md?p=l) status, including [due diligence](/usc/20/1085.md?p=f) activities required pursuant to regulations of the [Secretary](/usc/20/1003.md?p=17).
    - (C) **Enrollment and repayment status management—** The term “enrollment and repayment status management” means activities of a [guaranty agency](/usc/20/1085.md?p=j) that are directly related to ascertaining the student’s enrollment status, including prompt notification to the [lender](/usc/20/1019.md?p=6) of such status, an audit of the note or written agreement to determine if the provisions of that note or agreement are consistent with the records of the [guaranty agency](/usc/20/1085.md?p=j) as to the principal amount of the [loan](/usc/20/1066a.md?p=2) guaranteed, and an examination of the note or agreement to assure that the repayment provisions are consistent with the provisions of this part.
- (e) **Ownership and regulation of Operating Fund—**
  - (1) **Ownership—** The Operating Fund, with the exception of funds transferred from the Federal Fund in accordance with [section 1072a(f) of this title](/usc/20/1072a.md?p=f), shall be considered to be the property of the [guaranty agency](/usc/20/1085.md?p=j).
  - (2) **Regulation—** Except as provided in [paragraph (3)](#e-3), the [Secretary](/usc/20/1003.md?p=17) may not regulate the uses or expenditure of moneys in the Operating Fund, but the [Secretary](/usc/20/1003.md?p=17) may require such necessary reports and audits as provided in [section 1078(b)(2) of this title](/usc/20/1078.md?p=b-2).
  - (3) **Exception—** Notwithstanding paragraphs [(1)](#e-1) and [(2)](#e-2), during any period in which funds are owed to the Federal Fund as a result of transfer under [section 1072a(f) of this title](/usc/20/1072a.md?p=f)—
    - (A) moneys in the Operating Fund may only be used for expenses related to the student [loan](/usc/20/1066a.md?p=2) programs authorized under this part; and
    - (B) the [Secretary](/usc/20/1003.md?p=17) may regulate the uses or expenditure of moneys in the Operating Fund.

## Footnotes

[^1]: See References in Text note below.

## Source credit

(Pub. L. 89–329, title IV, § 422B, as added Pub. L. 105–244, title IV, § 413(b), Oct. 7, 1998, 112 Stat. 1677.)

## Notes

### Editorial Notes

### References in Text

Section 1078(c)(6)(B) of this title, referred to in subsec. (c)(5), was redesignated section 1078(c)(6)(A)(ii) of this title by Pub. L. 109–171, title VIII, § 8014(d)(3)(A), (B), Feb. 8, 2006, 120 Stat. 170.

### Statutory Notes and Related Subsidiaries

### Effective Date

Section effective Oct. 1, 1998, except as otherwise provided in Pub. L. 105–244, see section 3 of Pub. L. 105–244, set out as an Effective Date of 1998 Amendment note under section 1001 of this title.