AL 95-5
Subject:  FFEL Student Loan Program

TO:  Chief Executive Officers and Compliance Officers of all National Banks, 
     Department and Division Heads and All Examining Personnel


PURPOSE

The purpose of this letter is to advise banks participating in the Federal 
Family Education Loan Program of a new compliance audit requirement.


REQUIREMENTS

A change in the Higher Education Act of 1965, implemented by 34 CFR 682.305(c) 
requires annual audits, beginning with your first fiscal year after July 23, 
1992.  Audit guidelines were recently developed by the Department of 
Education and made available in April 1995.  A copy of the audit guide can be 
obtained by calling the Federal Student Aid Information Center at the 
Department of Education at 1-(800)-433-3243.

The initial audit(s) for fiscal years 1993 and 1994 must be completed by 
September 30, 1995. Failure to complete the required audit may jeopardize the 
bank's rights under the FFEL program.  There is no size threshold to these 
audit requirements.  All banks participating in FFEL programs must comply.   
Further, the auditor "must meet the qualification and independence standards 
contained in Government Accounting Standards, including the requirements 
relating to continuing professional education.  Internal auditors of a lender 
are not independent of the entity while auditing within it."  

Lenders who originate and/or hold $10 million or more in a fiscal year, and 
lenders whose reports identify findings of noncompliance, must file the full 
audit report with: Guarantor and Lender Oversight Staff 
                   U.S. Department of Education 
                   600 Independence Avenue, SW 
                   Room 4624, ROB-3
                   Washington, DC  20202-5132

Other participating lenders must retain their reports for three years and 
submit them to the Guarantor and Lender Oversight Staff if requested.

Questions pertaining to the audit guide should be directed to the applicable 
Regional Inspector General's Office attached to this letter.

National banks are reminded that, when they participate in government 
programs, they must stay abreast of all requirements to ensure continuation 
of any associated guarantees.

ORIGINATING OFFICE

For questions on this advisory letter, contact the Chief National Bank 
Examiner's Office, (202) 874-5170.



                                           
Jimmy F. Barton
Chief National Bank Examiner
Date: August 10, 1995

Attachment
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