--- kind: "section" citation: "20 U.S.C. § 1081" title: "20" title_heading: "Education" number: "1081" heading: "Insurance fund" release: "119-102" date: "2026-07-12" url: "https://uscodex.org/usc/20/1081" units: - "Chapter 28 — Higher Education Resources and Student Assistance" - "Subchapter IV — Student Assistance" - "Part B — Federal Family Education Loan Program" --- # §1081. Insurance fund - (a) **Establishment—** There is hereby established a student [loan](/usc/20/1066a.md?p=2) insurance fund (hereinafter in this section called the “fund”) which shall be available without fiscal year limitation to the [Secretary](/usc/20/1003.md?p=17) for making payments in connection with the [default](/usc/20/1085.md?p=l) of [loans](/usc/20/1066a.md?p=2) insured by the [Secretary](/usc/20/1003.md?p=17) under this part, or in connection with payments under a guaranty agreement under [section 1078(c) of this title](/usc/20/1078.md?p=c). All amounts received by the [Secretary](/usc/20/1003.md?p=17) as premium charges for insurance and as receipts, earnings, or proceeds derived from any claim or other [assets](/usc/20/1087vv.md?p=f-1) acquired by the [Secretary](/usc/20/1003.md?p=17) in connection with operations under this part, any excess advances under [section 1072 of this title](/usc/20/1072.md), and any other moneys, property, or [assets](/usc/20/1087vv.md?p=f-1) derived by the [Secretary](/usc/20/1003.md?p=17) from operations in connection with this section, shall be deposited in the fund. All payments in connection with the [default](/usc/20/1085.md?p=l) of [loans](/usc/20/1066a.md?p=2) insured by the [Secretary](/usc/20/1003.md?p=17) under this part, or in connection with such guaranty agreements shall be paid from the fund. Moneys in the fund not needed for current operations under this section may be invested in bonds or other obligations guaranteed as to principal and [interest](/usc/20/1066a.md?p=6) by the United States. - (b) **Borrowing authority—** If at any time the moneys in the fund are insufficient to make payments in connection with the [default](/usc/20/1085.md?p=l) of any [loan](/usc/20/1066a.md?p=2) insured by the [Secretary](/usc/20/1003.md?p=17) under this part, or in connection with any guaranty agreement made under [section 1078(c) of this title](/usc/20/1078.md?p=c), the [Secretary](/usc/20/1003.md?p=17) is authorized, to the extent provided in advance by appropriations Acts, to issue to the [Secretary](/usc/20/1003.md?p=17) of the Treasury notes or other obligations in such forms and denominations, bearing such maturities, and subject to such terms and conditions as may be prescribed by the [Secretary](/usc/20/1003.md?p=17) with the approval of the [Secretary](/usc/20/1003.md?p=17) of the Treasury. Such notes or other obligations shall bear [interest](/usc/20/1066a.md?p=6) at a rate determined by the [Secretary](/usc/20/1003.md?p=17) of the Treasury, taking into consideration the current average market yield on [outstanding](/usc/20/1066a.md?p=7) marketable obligations of the United States of comparable maturities during the month preceding the issuance of the notes or other obligations. The [Secretary](/usc/20/1003.md?p=17) of the Treasury is authorized and directed to purchase any notes and other obligations issued hereunder and for that purpose is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under [chapter 31](/usc/31/chstIII/ch31.md) of title 31, and the purposes for which securities may be issued under that chapter, are extended to include any purchase of such notes and obligations. The [Secretary](/usc/20/1003.md?p=17) of the Treasury may at any time sell any of the notes or other obligations acquired under this subsection. All redemptions, purchases, and sales by the [Secretary](/usc/20/1003.md?p=17) of the Treasury of such notes or other obligations shall be treated as public debt transactions of the United States. Sums borrowed under the subsection shall be deposited in the fund and redemption of such notes and obligations shall be made by the [Secretary](/usc/20/1003.md?p=17) from such fund. ## Source credit (Pub. L. 89–329, title IV, § 431, as added Pub. L. 99–498, title IV, § 402(a), Oct. 17, 1986, 100 Stat. 1400; amended Pub. L. 100–50, § 10(w), June 3, 1987, 101 Stat. 346.) ## Notes ### Editorial Notes ### Codification In subsec. (b), “chapter 31 of title 31” and “that chapter” substituted for “the Second Liberty Bond Act, as amended” and “that Act, as amended”, respectively, on authority of Pub. L. 97–258, § 4(b), Sept. 13, 1982, 96 Stat. 1067, the first section of which enacted Title 31, Money and Finance. ### Prior Provisions A prior section 1081, Pub. L. 89–329, title IV, § 431, Nov. 8, 1965, 79 Stat. 1245; Pub. L. 90–460, § 3(c), Aug. 3, 1968, 82 Stat. 638; Pub. L. 94–482, title I, § 127(a), Oct. 12, 1976, 90 Stat. 2126; Pub. L. 96–374, title XIII, § 1391(a)(1), Oct. 3, 1980, 94 Stat. 1503, related to a student loan insurance fund, prior to the general revision of this part by Pub. L. 99–498. ### Amendments 1987—Subsec. (a). Pub. L. 100–50 substituted “section 1072 of this title” for “section 1072(a)(4)(C) of this title”. ### Statutory Notes and Related Subsidiaries ### 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. ### Federal Family Education Loan Insurance Fund Pub. L. 105–244, title IV, § 434, Oct. 7, 1998, 112 Stat. 1711, provided that: “Any funds in the insurance fund, as established under section 431 of the Higher Education Act of 1965 (20 U.S.C. 1081), on the date of enactment of this Act [Oct. 7, 1998] shall be transferred to and deposited in the Treasury. All funds received by the Secretary of Education under subsection (a) of such section after the date of enactment of this Act shall be deposited into the fund in accordance with such subsection.” ### Transfer of Assets and Liabilities of the Vocational Student Loan Insurance Fund All assets and liabilities of the vocational student loan insurance fund transferred to the student loan insurance fund, see section 116(c)(2) of Pub. L. 90–575, set out as a note under former section 981 et seq. of this title.