What are the responsibilities of a guaranty agency for loans sold under the Loan Purchase Commitment Program?
A7 Prior to the sale of any loan, the guaranty agency maintains its responsibilities, obligations, and rights. These include responsibility for issuing the guarantee, reporting to the Department (i.e., NSLDS) and to other entities, and for providing default aversion activities, if required. Once the loan is sold, the Department assumes responsibility and the guaranty agency’s obligations end. Q8 I represent a state authority that provides higher education loans. My state law does not allow me to provide the full indemnity required by the Department under the Agreements. May the state authority still participate in the programs? A8 The Department has learned that a number of states have constitutional, statutory, regulatory, or common law rules prohibiting state authorities from undertaking indemnities as provided under the Agreements. While the Department must be mindful of cost neutrality concerns – and with it, an obligation to mitigate litigation risks related to the Agreements – th
