---
kind: "section"
citation: "20 U.S.C. § 1079"
title: "20"
title_heading: "Education"
number: "1079"
heading: "Certificate of Federal loan insurance—effective date of insurance"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/20/1079"
units:
  - "Chapter 28 — Higher Education Resources and Student Assistance"
  - "Subchapter IV — Student Assistance"
  - "Part B — Federal Family Education Loan Program"
---

# §1079. Certificate of Federal loan insurance—effective date of insurance

- (a) **Loan-by-loan insurance—**
  - (1) **Authority to issue certificates on application—** If, upon application by an [eligible lender](/usc/20/1019.md?p=4), made upon such form, containing such information, and supported by such evidence as the [Secretary](/usc/20/1003.md?p=17) may require, and otherwise in conformity with this section, the [Secretary](/usc/20/1003.md?p=17) finds that the applicant has made a [loan](/usc/20/1066a.md?p=2) to an eligible student which is insurable under the provisions of this part, he may issue to the applicant a certificate of insurance covering the [loan](/usc/20/1066a.md?p=2) and setting forth the amount and terms of the insurance.
  - (2) **Effectiveness of certificate—** Insurance evidenced by a certificate of insurance pursuant to [subsection (a)(1)](#a-1) shall become effective upon the date of issuance of the certificate, except that the [Secretary](/usc/20/1003.md?p=17) is authorized, in accordance with regulations, to issue commitments with respect to proposed [loans](/usc/20/1066a.md?p=2), or with respect to lines (or proposed lines) of credit, submitted by [eligible lenders](/usc/20/1019.md?p=4), and in that event, upon compliance with [subsection (a)(1)](#a-1) by the [lender](/usc/20/1019.md?p=6), the certificate of insurance may be issued effective as of the date when any [loan](/usc/20/1066a.md?p=2), or any payment by the [lender](/usc/20/1019.md?p=6) pursuant to a [line of credit](/usc/20/1085.md?p=e), to be covered by such insurance was made. Such insurance shall cease to be effective upon 60 days’ [default](/usc/20/1085.md?p=l) by the [lender](/usc/20/1019.md?p=6) in the payment of any installment of the premiums payable pursuant to [subsection (c)](#c).
  - (3) **Contents of applications—** An application submitted pursuant to [subsection (a)(1)](#a-1) shall contain (A) an agreement by the applicant to pay, in accordance with regulations, the premiums fixed by the [Secretary](/usc/20/1003.md?p=17) pursuant to subsection [(c)](#c), and (B) an agreement by the applicant that if the [loan](/usc/20/1066a.md?p=2) is covered by insurance the applicant will submit such supplementary reports and statement during the effective period of the [loan](/usc/20/1066a.md?p=2) agreement, upon such forms, at such times, and containing such information as the [Secretary](/usc/20/1003.md?p=17) may prescribe by or pursuant to regulation.
- (b) **Comprehensive insurance coverage certificate—**
  - (1) **Establishment of system by regulation—** In lieu of requiring a separate insurance application and issuing a separate certificate of insurance for each student [loan](/usc/20/1066a.md?p=2) made by an [eligible lender](/usc/20/1019.md?p=4) as provided in [subsection (a)](#a), the [Secretary](/usc/20/1003.md?p=17) may, in accordance with regulations consistent with [section 1074 of this title](/usc/20/1074.md), issue to any [eligible lender](/usc/20/1019.md?p=4) applying therefor a certificate of comprehensive insurance coverage which shall, without further action by the [Secretary](/usc/20/1003.md?p=17), insure all insurable [loans](/usc/20/1066a.md?p=2) made by that [lender](/usc/20/1019.md?p=6), on or after the date of the certificate and before a specified cutoff date, within the limits of an aggregate maximum amount stated in the certificate. Such regulations may provide for conditioning such insurance, with respect to any [loan](/usc/20/1066a.md?p=2), upon compliance by the [lender](/usc/20/1019.md?p=6) with such requirements (to be stated or incorporated by reference in the certificate) as in the [Secretary](/usc/20/1003.md?p=17)’s judgment will best achieve the purpose of this subsection while protecting the United States from the risk of unreasonable loss and promoting the objectives of this part, including (but not limited to) provisions as to the reporting of such [loans](/usc/20/1066a.md?p=2) and information relevant thereto to the [Secretary](/usc/20/1003.md?p=17) and as to the payment of initial and other premiums and the effect of [default](/usc/20/1085.md?p=l) therein, and including provision for confirmation by the [Secretary](/usc/20/1003.md?p=17) from time to time (through endorsement of the certificate) of the coverage of specific new [loans](/usc/20/1066a.md?p=2) by such certificate, which confirmation shall be incontestable by the [Secretary](/usc/20/1003.md?p=17) in the absence of fraud or misrepresentation of fact or patent error.
  - (2) **Uncovered loans—** If the [holder](/usc/20/1085.md?p=i) of a certificate of comprehensive insurance coverage issued under this subsection grants to a student a [line of credit](/usc/20/1085.md?p=e) extending beyond the cutoff date specified in that certificate, [loans](/usc/20/1066a.md?p=2) or payments thereon made by the [holder](/usc/20/1085.md?p=i) after that date pursuant to the [line of credit](/usc/20/1085.md?p=e) shall not be deemed to be included in the coverage of that certificate except as may be specifically provided therein; but, subject to the limitations of [section 1074 of this title](/usc/20/1074.md), the [Secretary](/usc/20/1003.md?p=17) may, in accordance with regulations, make commitments to insure such future [loans](/usc/20/1066a.md?p=2) or payments, and such commitments may be honored either as provided in [subsection (a)](#a) or by inclusion of such insurance on comprehensive coverage under the subsection for the period or periods in which such future [loans](/usc/20/1066a.md?p=2) or payments are made.
- (c) **Charges for Federal insurance—** The [Secretary](/usc/20/1003.md?p=17) shall, pursuant to regulations, charge for insurance on each [loan](/usc/20/1066a.md?p=2) under this part a premium in an amount not to exceed one-fourth of 1 percent per year of the unpaid principal amount of such [loan](/usc/20/1066a.md?p=2) (excluding [interest](/usc/20/1066a.md?p=6) added to principal), payable in advance, at such times and in such manner as may be prescribed by the [Secretary](/usc/20/1003.md?p=17). Such regulations may provide that such premium shall not be payable, or if paid shall be refundable, with respect to any period after [default](/usc/20/1085.md?p=l) in the payment of principal or [interest](/usc/20/1066a.md?p=6) or after the borrower has died or becomes totally and permanently disabled, if (1) notice of such [default](/usc/20/1085.md?p=l) or other event has been duly given, and (2) requests for payment of the loss insured against has been made or the [Secretary](/usc/20/1003.md?p=17) has made such payment on his own motion pursuant to [section 1080(a) of this title](/usc/20/1080.md?p=a).
- (d) **Assignability of insurance—** The rights of an [eligible lender](/usc/20/1019.md?p=4) arising under insurance evidenced by a certificate of insurance issued to it under this section may be assigned as security by such [lender](/usc/20/1019.md?p=6) only to another [eligible lender](/usc/20/1019.md?p=4), and subject to regulation by the [Secretary](/usc/20/1003.md?p=17).
- (e) **Consolidation not to affect insurance—** The consolidation of the obligations of two or more federally insured [loans](/usc/20/1066a.md?p=2) obtained by a student borrower in any fiscal year into a single obligation evidenced by a single instrument of indebtedness shall not affect the insurance by the United States. If the [loans](/usc/20/1066a.md?p=2) thus consolidated are covered by separate certificates of insurance issued under [subsection (a)](#a), the [Secretary](/usc/20/1003.md?p=17) may upon surrender of the original certificates issue a new certificate of insurance in accordance with that subsection upon the consolidated obligation; if they are covered by a single comprehensive certificate issued under [subsection (b)](#b), the [Secretary](/usc/20/1003.md?p=17) may amend that certificate accordingly.

## Source credit

(Pub. L. 89–329, title IV, § 429, as added Pub. L. 99–498, title IV, § 402(a), Oct. 17, 1986, 100 Stat. 1395.)

## Notes

### Editorial Notes

### Prior Provisions

A prior section 1079, Pub. L. 89–329, title IV, § 429, Nov. 8, 1965, 79 Stat. 1243; Pub. L. 94–482, title I, § 127(a), Oct. 12, 1976, 90 Stat. 2123; Pub. L. 96–374, title XIII, § 1391(a)(1), (2), Oct. 3, 1980, 94 Stat. 1503, related to certificates of Federal loan insurance, prior to the general revision of this part by Pub. L. 99–498.