20 U.S.C. § 1087cc — Agreements with institutions of higher education

(a) Contents of agreements. An agreement with an institution of higher education for Federal capital contributions under this part must do all of the following: (1) It must establish and maintain a student loan fund for this part. (2) It must require the fund to receive: (A) Federal capital contributions from money appropriated under section 1087aa; (B) a contribution from the institution equal to one-third of those Federal contributions; (C) principal and interest collected on student loans made from money in the fund; (D) charges collected under regulations issued under section 1087dd(c)(1)(H); and (E) all other earnings of the fund. (3) It must limit the fund’s use to: (A) loans to students under this part; (B) administrative expenses allowed under subsection (b); (C) capital distributions under section 1087ff; and (D) litigation costs and other collection costs agreed to by the Secretary in connection with collecting a loan from the fund, interest on that loan, or a charge assessed under section 1087dd(c)(1)(H). (4) It must address what happens when a note or written loan agreement is in default even though the institution has diligently tried to collect it. (A) If the institution knowingly failed to keep an acceptable collection record for the loan, as the Secretary determines under regulatory criteria, the Secretary may: (i) require the institution to assign the note or agreement to the Secretary without payment to the institution; and (ii) distribute money collected on the loan among other institutions under section 1087bb, after subtracting up to 30 percent of the money collected for the Secretary’s collection costs. (B) If the institution is not described in subparagraph (A), the Secretary may allow it to refer the note or agreement to the Secretary without payment to the institution. Once every six months, money collected on the loan, after subtracting up to 30 percent for the Secretary’s collection costs, must be repaid to that institution and treated as an additional capital contribution under section 1087bb. (5) If the institution decides not to service and collect student loans made from money under this part, it must, when repayment begins, assign the notes or other evidence of those obligations to the Secretary. The Secretary must distribute money collected on them among other institutions under section 1087bb, after subtracting up to 30 percent for the Secretary’s collection costs. (6) Despite any other law, the Secretary must give the institution any available information about borrowers’ names and addresses, or other relevant information, regardless of the source of the information. (7) It must assure that the institution will follow section 1087cc–1. (8) It must require the institution to make loans first to students with exceptional need. (9) It may include other reasonable provisions needed to protect the United States from an unreasonable risk of loss, if the Secretary and institution agree to them. This paragraph does not allow the Secretary to require assignment of loans except as paragraphs (4) and (5) allow. (b) Administrative expenses. For each fiscal year in which an institution that signed an agreement under subsection (a) makes student loans from the fund created by that agreement, the institution is entitled to a payment instead of reimbursement for its expenses administering this part’s student loan program during that year. The payment must follow section 1096. (c) Cooperative agreements with consumer reporting agencies. (1) To promote responsible repayment, the Secretary and each participating institution must enter cooperative agreements with consumer reporting agencies. The agreements must allow information to be exchanged about student borrowers whom the Secretary received as referrals under section 1087gg and about loans held by the Secretary or an institution. (2) Each agreement must follow section 1080a. It must also allow the Secretary or institution that holds a loan to disclose to the reporting agencies: (A) the loan’s disbursement date and amount when the loan is disbursed; (B) information about repayment and collection, including the loan’s status; and (C) the date the note is cancelled after the borrower finishes repayment, or when the borrower’s loan obligation is cancelled or discharged for any reason. (3) Despite 15 U.S.C. 1681c(a)(4) and (5), a consumer reporting agency may report information received from the Secretary or an institution about the status of a borrower’s account on a loan under this part until the loan is paid in full. (4)(A) Unless subparagraph (B) applies, after consulting the Secretary and under the agreements in paragraph (1), an institution must at least once a year give each reporting agency that has such an agreement with the Secretary the information listed in paragraph (2). It must promptly report any change to previously reported information. (B) The Secretary may issue regulations setting criteria under which an institution may stop reporting that information before the loan is paid in full. (5) When a borrower with a defaulted loan made and held by the institution makes 6 consecutive monthly payments, the institution must notify the appropriate reporting agencies. The purpose is to encourage them to update the information about the borrower’s status. (d) Limitation on use of interest-bearing accounts. When applying subsection (a)(9), the Secretary may not require a collection agency, collection attorney, or loan servicer collecting loans under this part to put collected money in interest-bearing accounts unless that agency, attorney, or servicer holds the money for more than 45 days. (e) Special due diligence rule. When applying subsection (a)(5)’s due-diligence requirement, the Secretary must make every effort to ensure that institutions may use Internal Revenue Service skip-tracing collection procedures for loans under this part.