---
kind: "section"
citation: "20 U.S.C. § 1087i–1"
title: "20"
title_heading: "Education"
number: "1087i–1"
heading: "Temporary authority to purchase student loans"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/20/1087i-1"
units:
  - "Chapter 28 — Higher Education Resources and Student Assistance"
  - "Subchapter IV — Student Assistance"
  - "Part D — William D. Ford Federal Direct Loan Program"
---

# §1087i–1. Temporary authority to purchase student loans

- (a) **Authority to purchase—**
  - (1) **Authority; determination required—** Upon a determination by the [Secretary](/usc/20/1003.md?p=17) that there is an inadequate availability of [loan](/usc/20/1066a.md?p=2) capital to meet the demand for [loans](/usc/20/1066a.md?p=2) under sections [1078](/usc/20/1078.md), [1078–2](/usc/20/1078–2.md), or [1078–8](/usc/20/1078–8.md) of this title, whether as a result of inadequate liquidity for such [loans](/usc/20/1066a.md?p=2) or for other reasons, the [Secretary](/usc/20/1003.md?p=17), in consultation with the [Secretary](/usc/20/1003.md?p=17) of the Treasury, is authorized to purchase, or enter into forward commitments to purchase, from any [eligible lender](/usc/20/1019.md?p=4), as defined by [section 1085(d)(1) of this title](/usc/20/1085.md?p=d-1), [loans](/usc/20/1066a.md?p=2) first disbursed under sections [1078](/usc/20/1078.md), [1078–2](/usc/20/1078–2.md), or [1078–8](/usc/20/1078–8.md) of this title on or after October 1, 2003, and before July 1, 2010, on such terms as the [Secretary](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) of the Treasury, and the Director of the Office of Management and Budget jointly determine are in the best [interest](/usc/20/1066a.md?p=6) of the United States, except that any purchase under this section shall not result in any net cost to the Federal Government (including the cost of servicing the [loans](/usc/20/1066a.md?p=2) purchased), as determined jointly by the [Secretary](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) of the Treasury, and the Director of the Office of Management and Budget.
  - (2) **Federal Register notice—** The [Secretary](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) of the Treasury, and the Director of the Office of Management and Budget, shall jointly publish a notice in the Federal Register prior to any purchase of [loans](/usc/20/1066a.md?p=2) under [paragraph (1)](#a-1) that—
    - (A) establishes the terms and conditions governing the purchases authorized by [paragraph (1)](#a-1);
    - (B) includes an outline of the methodology and factors that the [Secretary](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) of the Treasury, and the Director of the Office of Management and Budget, will jointly consider in evaluating the price at which to purchase [loans](/usc/20/1066a.md?p=2) made under section [1078](/usc/20/1078.md), [1078–2](/usc/20/1078–2.md), or [1078–8](/usc/20/1078–8.md) of this title; and
    - (C) describes how the use of such methodology and consideration of such factors used to determine purchase price will ensure that [loan](/usc/20/1066a.md?p=2) purchases do not result in any net cost to the Federal Government (including the cost of servicing the [loans](/usc/20/1066a.md?p=2) purchased).
  - (3) **Temporary authority to purchase rehabilitated loans—**
    - (A) **Authority—** In addition to the authority described in [paragraph (1)](#a-1), the [Secretary](/usc/20/1003.md?p=17), in consultation with the [Secretary](/usc/20/1003.md?p=17) of the Treasury, is authorized to purchase, or enter into forward commitments to purchase, from any [eligible lender](/usc/20/1019.md?p=4) (as defined in [section 1085(d)(1) of this title](/usc/20/1085.md?p=d-1)), [loans](/usc/20/1066a.md?p=2) that such [lender](/usc/20/1019.md?p=6) purchased under [section 1078–6 of this title](/usc/20/1078–6.md) on or after October 1, 2003, and before July 1, 2010, and that are not in [default](/usc/20/1085.md?p=l), on such terms as the [Secretary](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) of the Treasury, and the Director of the Office of Management and Budget jointly determine are in the best [interest](/usc/20/1066a.md?p=6) of the United States, except that any purchase under this paragraph shall not result in any net cost to the Federal Government (including the cost of servicing the [loans](/usc/20/1066a.md?p=2) purchased), as determined jointly by the [Secretary](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) of the Treasury, and the Director of the Office of Management and Budget.
    - (B) **Federal Register notice—** The [Secretary](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) of the Treasury, and the Director of the Office of Management and Budget shall jointly publish a notice in the Federal Register prior to any purchase of [loans](/usc/20/1066a.md?p=2) under this paragraph that—
      - (i) establishes the terms and conditions governing the purchases authorized by this paragraph;
      - (ii) includes an outline of the methodology and factors that the [Secretary](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) of the Treasury, and the Director of the Office of Management and Budget will jointly consider in evaluating the price at which to purchase [loans](/usc/20/1066a.md?p=2) rehabilitated pursuant to [section 1078–6(a) of this title](/usc/20/1078–6.md?p=a); and
      - (iii) describes how the use of such methodology and consideration of such factors used to determine purchase price will ensure that [loan](/usc/20/1066a.md?p=2) purchases do not result in any net cost to the Federal Government (including the cost of servicing the [loans](/usc/20/1066a.md?p=2) purchased).
- (b) **Proceeds—** The [Secretary](/usc/20/1003.md?p=17) shall require, as a condition of any purchase under [subsection (a)](#a), that the funds paid by the [Secretary](/usc/20/1003.md?p=17) to any [eligible lender](/usc/20/1019.md?p=4) under this section be used—
  - (1) to ensure continued participation of such [lender](/usc/20/1019.md?p=6) in the Federal student [loan](/usc/20/1066a.md?p=2) programs authorized under part B of this subchapter; and
  - (2)
    - (A) in the case of [loans](/usc/20/1066a.md?p=2) purchased pursuant to [subsection (a)(1)](#a-1), to originate new Federal [loans](/usc/20/1066a.md?p=2) to students, as authorized under part B of this subchapter; or
    - (B) in the case of [loans](/usc/20/1066a.md?p=2) purchased pursuant to [subsection (a)(3)](#a-3), to originate such new Federal [loans](/usc/20/1066a.md?p=2) to students, or to purchase [loans](/usc/20/1066a.md?p=2) in accordance with [section 1078–6(a) of this title](/usc/20/1078–6.md?p=a).
- (c) **Maintaining servicing arrangements—** The [Secretary](/usc/20/1003.md?p=17) may, if agreed upon by an [eligible lender](/usc/20/1019.md?p=4) selling [loans](/usc/20/1066a.md?p=2) under this section, contract with such [lender](/usc/20/1019.md?p=6) for the servicing of the [loans](/usc/20/1066a.md?p=2) purchased, provided that—
  - (1) the cost of such servicing arrangement does not exceed the cost the Federal Government would otherwise incur for the servicing of [loans](/usc/20/1066a.md?p=2) purchased, as determined under [subsection (a)](#a); and
  - (2) such servicing arrangement is in the best [interest](/usc/20/1066a.md?p=6) of the borrowers whose [loans](/usc/20/1066a.md?p=2) are purchased.
- (d) **Guaranty agency responsibilities and payments—** Notwithstanding any other provision of this chapter, beginning on the date on which the [Secretary](/usc/20/1003.md?p=17) purchases a [loan](/usc/20/1066a.md?p=2) under this section—
  - (1) the [guaranty agency](/usc/20/1085.md?p=j) that insured such [loan](/usc/20/1066a.md?p=2) shall cease to have any obligations, responsibilities, or rights (including rights to any payment) under this chapter for any activity related to the administration of such [loan](/usc/20/1066a.md?p=2) that is carried out or required to be carried out on or after the date of such purchase; and
  - (2) the insurance issued by such agency pursuant to [section 1078(b) of this title](/usc/20/1078.md?p=b) for such [loan](/usc/20/1066a.md?p=2) shall cease to be effective with respect to any [default](/usc/20/1085.md?p=l) on such [loan](/usc/20/1066a.md?p=2) that occurs on or after the date of such purchase.
- (e) **Reports and cost estimates—** The [Secretary](/usc/20/1003.md?p=17) shall prepare, transmit to the [authorizing committees](/usc/20/1003.md?p=1), and make available to the public, the following:
  - (1) **Quarterly reports—**
    - (A) **Contents—** Not later than 60 days after the end of each quarter during the period beginning July 1, 2008, and ending September 30, 2010, a quarterly report on—
      - (i) the number of [loans](/usc/20/1066a.md?p=2) the [Secretary](/usc/20/1003.md?p=17) has agreed to purchase, or has purchased, using the authority provided under this section, and the total amount of [outstanding](/usc/20/1066a.md?p=7) principal and accrued [interest](/usc/20/1066a.md?p=6) of such [loans](/usc/20/1066a.md?p=2), during such period; and
      - (ii) the number of [loans](/usc/20/1066a.md?p=2) in which the [Secretary](/usc/20/1003.md?p=17) has purchased a participation [interest](/usc/20/1066a.md?p=6), and the total amount of [outstanding](/usc/20/1066a.md?p=7) principal and accrued [interest](/usc/20/1066a.md?p=6) of such [loans](/usc/20/1066a.md?p=2), during such period.
    - (B) **Disaggregated information—** For each quarterly report, the information described in clauses [(i)](#e-1-A-i) and [(ii)](#e-1-A-ii) of subparagraph (A) shall be disaggregated by [lender](/usc/20/1019.md?p=6) and, for each [lender](/usc/20/1019.md?p=6), by category of institution (using the categories described in [section 1015a(d) of this title](/usc/20/1015a.md?p=d)) and type of [loan](/usc/20/1066a.md?p=2).
  - (2) **Estimates of purchase program costs—** Not later than February 15, 2011, an estimate of the costs associated with the program of purchasing [loans](/usc/20/1066a.md?p=2) described in [paragraph (1)(A)(i)](#e-1-A-i) during the period beginning July 1, 2008, and ending September 30, 2010, and an estimate of the costs associated with the program of purchasing a participation [interest](/usc/20/1066a.md?p=6) in [loans](/usc/20/1066a.md?p=2) described in [paragraph (1)(A)(ii)](#e-1-A-ii) during such period. Each such estimate shall—
    - (A) contain the same level of detail, and be reported in a similar manner, as the budget estimates provided for the [loan](/usc/20/1066a.md?p=2) program under part B and the direct student [loan](/usc/20/1066a.md?p=2) program under this part in the President’s annual budget submission to Congress, except that current and future administrative costs shall also be reported;
    - (B) include an estimate of the gross and net outlays that have been, or will be, incurred by the Federal Government (including subsidy and administrative costs, and any payments made by the [Department](/usc/20/1003.md?p=4) to [lenders](/usc/20/1019.md?p=6), trusts, or other entities related to such activities) in purchasing such [loans](/usc/20/1066a.md?p=2) or purchasing a participation [interest](/usc/20/1066a.md?p=6) in such [loans](/usc/20/1066a.md?p=2) during such period (as applicable); and
    - (C) include a comparison of—
      - (i) the average amount of the gross and net outlays (including costs and payments) described in [subparagraph (B)](#e-2-B) for each $100 of [loans](/usc/20/1066a.md?p=2) purchased or for which a participation [interest](/usc/20/1066a.md?p=6) was purchased (as applicable) during such period, disaggregated by type of [loan](/usc/20/1066a.md?p=2); with
      - (ii) the average amount of such gross and net outlays (including costs and payments) to the Federal Government for each $100 of comparable [loans](/usc/20/1066a.md?p=2) made under this part and part B during such period, disaggregated by part and by type of [loan](/usc/20/1066a.md?p=2).
  - (3) **Annual cost estimates—** Not later than February 15 of the fiscal year following each of the fiscal years 2008, 2009, 2010, and 2011, an annual estimate of the costs associated with the program of purchasing [loans](/usc/20/1066a.md?p=2) described in [paragraph (1)(A)(i)](#e-1-A-i), and an annual estimate of the costs associated with the program of purchasing a participation [interest](/usc/20/1066a.md?p=6) in [loans](/usc/20/1066a.md?p=2) described in [paragraph (1)(A)(ii)](#e-1-A-ii), that includes the information described in [paragraph (2)](#e-2) for such fiscal year.
- (f) **Expiration of authority—** The [Secretary](/usc/20/1003.md?p=17)’s authority to purchase [loans](/usc/20/1066a.md?p=2) under this section shall expire on July 1, 2010.

## Source credit

(Pub. L. 89–329, title IV, § 459A, as added Pub. L. 110–227, § 7(b), May 7, 2008, 122 Stat. 746; amended Pub. L. 110–315, title IV, § 453, Aug. 14, 2008, 122 Stat. 3263; Pub. L. 110–350, § 1, Oct. 7, 2008, 122 Stat. 3947; Pub. L. 111–39, title IV, § 404(a), July 1, 2009, 123 Stat. 1945.)

## Notes

### Editorial Notes

### Amendments

2009—Subsec. (a)(2). Pub. L. 111–39, § 404(a)(1)(A), substituted “purchase of loans under paragraph (1)” for “purchase of loans under this section” in introductory provisions.

Subsec. (a)(3). Pub. L. 111–39, § 404(a)(1)(B), added par. (3).

Subsec. (b). Pub. L. 111–39, § 404(a)(2), amended subsec. (b) generally. Prior to amendment, text read as follows: “The Secretary shall require, as a condition of any purchase under subsection (a), that the funds paid by the Secretary to any eligible lender under this section shall be used: (1) to ensure continued participation of such lender in the Federal student loan programs authorized under part B of this subchapter; and (2) to originate new Federal loans to students, as authorized under part B of this subchapter.”

2008—Subsec. (a)(1). Pub. L. 110–350, § 1(1), substituted “July 1, 2010” for “July 1, 2009”.

Subsecs. (d), (e). Pub. L. 110–315, § 453(2), added subsecs. (d) and (e). Former subsec. (d) redesignated (f).

Subsec. (e)(1)(A). Pub. L. 110–350, § 1(2)(A), substituted “September 30, 2010” for “September 30, 2009” in introductory provisions.

Subsec. (e)(2). Pub. L. 110–350, § 1(2)(A), (B), substituted “February 15, 2011” for “February 15, 2010” and “September 30, 2010” for “September 30, 2009” in introductory provisions.

Subsec. (e)(3). Pub. L. 110–350, § 1(2)(C), substituted “2009, 2010, and 2011” for “2009, and 2010”.

Subsec. (f). Pub. L. 110–350, § 1(1), substituted “July 1, 2010” for “July 1, 2009”.

Pub. L. 110–315, § 453(1), redesignated subsec. (d) as (f).

### 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.