15-62.1-05. Establishment and maintenance of adequate guarantee funds - Appropriation

15-62.1-05. Establishment and maintenance of adequate guarantee funds -

Appropriation.

The agency may enter into an agreement with the federal government for the coinsurance

of loans guaranteed under this program. The agency shall establish and at all times maintain

from funds appropriated under this chapter adequate guarantee reserve funds in special

accounts in the Bank of North Dakota unless required by title IV, part B, of the Higher Education

Act of 1965 [Pub. L. 89-329; 79 Stat. 1236; Pub. L. 99-498; 100 Stat. 1353; Pub. L. 105-244;

112 Stat. 1581; 20 U.S.C. 1001 et seq.], as amended through December 31, 1998, to be

invested elsewhere. The fund for loans that are coinsured by the federal government must be

maintained at a minimum amount equal to the requirements set forth in title IV, part B, of the

Higher Education Act of 1965 [Pub. L. 89-329; 79 Stat. 1236; Pub. L. 99-498; 100 Stat. 1353;

Pub. L. 105-244; 112 Stat. 1581; 20 U.S.C. 1001 et seq.], as amended through December 31,

1998. The fund for loans that are not coinsured by the federal government will be determined by

the agency but may be no less than the Bank of North Dakota historical default rate. Funds

appropriated under this chapter and designated as guarantee agency reserve funds for loans

that are not coinsured by the federal government must be administered separately and

segregated from reserve funds for loans that are coinsured by the federal government. The

securities in which the moneys in the reserve funds may be invested must meet the same

requirements as those authorized for investment under the state investment board. The income

from such investments must be made available for the costs of administering the respective

guarantee loan programs and income in excess of that required to pay the cost of administering

the programs must be deposited in the respective reserve fund that corresponds to the source

of the initial invested funds. The proceeds of reserve funds received from federal, state, or

private sources, for the purpose of guaranteeing loans made to students as provided in this

chapter, are appropriated as a continuing appropriation for the payment of defaulted loans

guaranteed by each respective fund.