((a)) ** Establishment** Each guaranty agency shall, not later than 60 days after , establish a fund designated as the Operating Fund.October 7, 19981998-10-07

((b)) ** Investment of funds** Funds deposited into the Operating Fund shall be invested at the discretion of the guaranty agency in accordance with prudent investor standards.

((c)) ** Additional deposits** After the establishment of the Operating Fund, the guaranty agency shall deposit into the Operating Fund—

((1)) the loan processing and issuance fee paid by the Secretary pursuant to ;

((2)) 30 percent of amounts received after , from the Secretary as payment for administrative cost allowances for loans upon which insurance was issued prior to ;

((3)) the account maintenance fee paid by the Secretary in accordance with ;

((4)) the default aversion fee paid in accordance with section 1078() of this title;

((5)) amounts remaining pursuant to section 1078(c)(6)(B)  of this title from collection on defaulted loans held by the agency, after payment of the Secretary’s equitable share, excluding amounts deposited in the Federal Fund pursuant to ; and

((6)) other receipts as specified in regulations of the Secretary.

((d)) ** Uses of funds**

((1)) ** In general** Funds in the Operating Fund shall be used for application processing, loan disbursement, enrollment and repayment status management, default aversion activities (including those described in ), default collection activities, school and lender training, financial aid awareness and related outreach activities, compliance monitoring, and other student financial aid related activities, as selected by the guaranty agency.section 1072(h)(8) of this title

((2)) ** Special rule** The guaranty agency may, in the agency’s discretion, transfer funds from the Operating Fund to the Federal Fund for use pursuant to . Such transfer shall be irrevocable, and any funds so transferred shall become the sole property of the United States.section 1072a of this title

((3)) ** Definitions** For purposes of this subsection:

((A)) ** Default collection activities** The term “default collection activities” means activities of a guaranty agency that are directly related to the collection of the loan on which a default claim has been paid to the participating lender, including the due diligence activities required pursuant to regulations of the Secretary.

((B)) ** Default aversion activities** The term “default aversion activities” means activities of a guaranty agency that are directly related to providing collection assistance to the lender on a delinquent loan, prior to the loan’s being legally in a default status, including due diligence activities required pursuant to regulations of the Secretary.

((C)) ** Enrollment and repayment status management** The term “enrollment and repayment status management” means activities of a guaranty agency that are directly related to ascertaining the student’s enrollment status, including prompt notification to the lender 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 as to the principal amount of the loan 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 , shall be considered to be the property of the guaranty agency.section 1072a(f) of this title

((2)) ** Regulation** Except as provided in paragraph (3), the Secretary may not regulate the uses or expenditure of moneys in the Operating Fund, but the Secretary may require such necessary reports and audits as provided in .section 1078(b)(2) of this title

((3)) ** Exception** Notwithstanding paragraphs (1) and (2), during any period in which funds are owed to the Federal Fund as a result of transfer under —

((A)) moneys in the Operating Fund may only be used for expenses related to the student loan programs authorized under this part; and

((B)) the Secretary may regulate the uses or expenditure of moneys in the Operating Fund.