This action was instituted by Robert E. Hicks, as Trustee of North American Acceptance Corporation (NAAC), to seek government repayment of defaulted student loans. NAAC is a financial institution that made loans to students as an eligible lender in the Federally Insured Student Loan Program of the United States Office of Education, Department of Health, Education and Welfare. Under this program, the federal government insures the repayment of student loans that conform to the Higher Education Act of 1965, Title IV, Part B, as amended, §§ 1001-1145 (1968), 20 U.S.C. §§ 1071-1085, and relevant regulations. The dispute in the present case arose when the government rejected 95 of NAAC's claims for government repayment of defaulted student loans on the ground that NAAC disbursed the loan funds before it had received a certificate of insurance for each loan from the Commissioner of Education (the Commissioner) and that NAAC thereby had failed to conform to the statute and relevant regulations.

It is uncontested that NAAC disbursed the student loans after it entered into a "Contract of Insurance" with the Commissioner but before loan applications were individually stamped "approved" by the government. In the district court, NAAC contended that the government waived its requirement that the lender not disburse loan funds before receiving an "issuance of insurance" because subordinate employees of the Office of Guaranteed Student Loans stamped the loan applications for approval after the beginning of the school term for which the funds were to be provided1 and allegedly made statements approving NAAC's practice of disbursing loan money prior to the stamping of the loans. The loan company claimed, in the alternative, that even if the requirement that the lender receive a certificate of insurance before disbursing funds did apply to the 95 disallowed loans, it had complied with the government regulations because the "Contract of Insurance" caused the insurance to be issued retroactive to the date of fund disbursement for each loan.

The district court dismissed NAAC's claims for loan repayment by granting the government's motion for summary judgment. Although we believe that the government in this case has not turned square corners in its business dealings with its citizens,2 we reluctantly find that the applicable law controlling the use of waiver and estoppel against the government compels us to affirm.

Government regulation 45 C.F.R. § 177.42(b), promulgated pursuant to the Higher Education Act of 1965, establishes procedures by which the Commissioner of Education insures student loans. It provides in relevant part that:

Each eligible lender with which the Commissioner has entered into an agreement . . . (under the program) may make application to the Commissioner for Federal loan insurance in connection with each application for a loan which the lender has initially determined to be eligible for such insurance coverage. Upon receipt of such application . . . the Commissioner shall determine whether or not the loan is insurable, and if the loan is determined to be insurable, the Commissioner shall, by affixing to the application evidence thereof, advise the lender that the loan is insurable and the amount of insurance. The insurance shall extend to all disbursements made pursuant to the loan, Except that, unless expressly provided for, no disbursements made on a loan prior to the issuance of insurance shall be covered.

(emphasis added). NAAC's contention that the government waived the requirement of issuance of insurance before loan disbursement, set forth in 45 C.F.R. § 177.42(b), cannot be accepted. It is true that the Higher Education Act of 1965 authorizes the Commissioner to "enforce, pay, compromise, Waive, or release any right . . . ." 20 U.S.C. § 1082(a)(6) (emphasis added). However, none of the persons to whom NAAC seeks to attribute the waiver of the applicable government regulation were empowered to waive or make an express exception to the regulatory provisions of the Federally Insured Student Loan Program, including 45 C.F.R. § 177.42(b).

Federal regulation prohibits any official, agent or employee of the Office of Education from waiving or altering any provision of the office's regulations or of any relevant statute except through amendment by publication in the Federal Register, and specifies that "no action or failure to act on the part of such official, agent, or employee shall operate in derogation of the Commissioner's right to enforcement of said provisions in accordance with their terms." 45 C.F.R. § 100a.483. In addition, the uncontroverted3 affidavits of the student loan program's chief administrative officer, Acting Associate Commissioner of Education Edwin P. Parker, III, and his predecessor in office, Associate Commissioner Kenneth A. Kohl, state that the authority to waive or make an express exception to the program's regulatory provisions was never delegated to subordinate employees below the associate commissioner level and, specifically, was never delegated to the employees named by NAAC as having made statements to it approving its practice of disbursing student loan money prior to having the loans stamped. Therefore, even if government employees purported to waive the requirements for obtaining federal student loan insurance, either by express statements or by stamping the loans "approved," they were acting outside the bounds of their authority and could not bind the government to repay the defaulted loans.4

Similarly, the alleged government approval of NAAC's practices and the lender's resulting change of position and injury5 did not prevent the United States, under a theory of estoppel, from invoking the requirements of 45 C.F.R. § 177.42(b) to reject NAAC's claims. Estoppel cannot be asserted against the United States in actions arising out of the exercise of its sovereign powers in encouraging lenders to make student loans. See, e. g., Federal Crop Insurance Corp. v. Merrill, 332 U.S. 380, 384, 68 S. Ct. 1, 3, 92 L. Ed. 10 (1947); Sanitary District of Chicago v. United States, 266 U.S. 405, 427, 45 S. Ct. 176, 69 L. Ed. 352 (1925); Utah Power & Light Co. v. United States, 243 U.S. 389, 408-09, 37 S. Ct. 387, 61 L. Ed. 791 (1917).

In deciding this case, we are constrained by well-established precedent. Prior cases mandate that "anyone entering into an arrangement with the Government takes the risk of having accurately ascertained that he who purports to act for the Government stays within the bounds of his authority." Federal Crop Insurance Corp. v. Merrill, supra. "The United States are neither bound nor estopped by the acts of their officers and agents in entering into an agreement or arrangement to do . . . what the law does not sanction or permit. . . . (T)hose dealing with an agent of the United States must be held to have had notice of the limitation of his authority." Wilber National Bank of Oneonta, New York v. United States, 294 U.S. 120, 123-24, 55 S. Ct. 362, 364, 79 L. Ed. 798 (1935). "(T)hat officers and employees of the government, with knowledge of what the defendants were doing, not only did not object thereto, but impliedly acquiesced therein . . . must fail (as a ground of estoppel) . . . . (N)eglect of duty on the part of officers of the government is no defense to a suit by it to enforce a public right or protect a public interest." Utah Power & Light Co. v. United States, supra, 243 U.S. at 409, 37 S. Ct. at 391. This circuit has unambiguously recognized that "an estoppel (does not) arise through an act or representation made by an officer or agent without authority to act for the government in the premises," United States v. State of Florida, 482 F.2d 205, 209 (5th Cir. 1973), so that "(r)egardless of the strong moral implications, it is well established that the Government is not bound by the unauthorized or incorrect statement of its agents." Posey v. United States, 449 F.2d 228, 234 (5th Cir. 1971). Assuming for the purposes of argument that NAAC, in reliance on statements by government employees and on the issuance of certificates of insurance for individual loans after funds already had been disbursed, reasonably believed that all of its student loans were federally insured, under the relevant precedent there nevertheless can be no question of material fact as to the existence of government waiver or estoppel that would allow NAAC to recover on its claims.

In addition to arguing waiver and estoppel against the government's position denying its claims for reimbursement, NAAC also claims that in fact it had complied with government regulations. NAAC asserts that under the Higher Education Act of 1965, § 429(a)(2), 20 U.S.C. § 1079(a)(2), the "Contract of Insurance" executed between the government and NAAC on July 12, 1971, was a government commitment covering all future loans to be made by NAAC under the Federally Insured Student Loan Program6 and caused the issuance of insurance for loans NAAC made between September 1971 and September 1973 to be retroactive to the date of disbursement of each loan. The section of the Act on which NAAC seeks to rely states in relevant part that:

Insurance evidenced by a certificate of insurance pursuant to subsection (a) (1) of this section shall become effective upon the date of issuance of the certificate, except that the Commissioner is authorized, in accordance with regulations, to issue commitments with respect to proposed loans, or with respect to lines (or proposed lines) of credit, submitted by eligible lenders, and in that event, upon compliance with subsection (a)(1) of this section by the lender, the certificate of insurance May be issued effective as of the date when any loan, or any payment by the lender pursuant to a line of credit, to be covered by such insurance was made.7

20 U.S.C. § 1079(a)(2) (emphasis added). However, the Act clearly makes the retroactive issuance of the certificate of insurance discretionary with the Commissioner.8 NAAC neither claimed nor proved that the Commissioner or his authorized delegates had exercised this discretion to make retroactive the effective date of the insurance for the contested loans. Since the insurance cannot be said to have been retroactively issued, NAAC failed to comply with federal regulation 45 C.F.R. § 177.42(b) by disbursing funds before its loan applications were approved and it received the certificates of insurance. As a result the United States did not insure the loans.

For the foregoing reasons, we must uphold the district court's summary judgment order denying NAAC recovery on defaulted student loans. Although the law compels us to rule that the government did not insure the loans at issue in the present case, one may doubt the wisdom of a doctrine that shields the United States from the consequences of actions or statements made by its agents and officers in business transactions with its citizens simply because the actions or statements were beyond the agent's actual authority. The current doctrine prohibiting estoppel against the government allows no consideration of the rationale underlying the rules of agency in ordinary fair business dealings or of the reasonableness of the citizen's reliance on the conduct or statements of government employees. We recognize the prima facie soundness of a general policy imposing on courts a duty "to observe the conditions defined by Congress for charging the public treasury,"9 Federal Crop Insurance Corp. v. Merrill, supra, 332 U.S. at 385, 68 S. Ct. at 3, and we recognize that "those who deal with the government should turn square corners," Id. at 387, 68 S.Ct. at 5 (Jackson, J., dissenting). But we can perceive no reason for applying these broad principles so unyieldingly that the "square corners . . . constitute a one-way street." Id. at 388, 68 S.Ct. at 5.

AFFIRMED.