Guidelines for determining the maximum amount of cash reserves needed by agencies guaranteeing loans under the Guaranteed Student Loan Program are offered to the U.S. House of Representatives by the U.S. General Accounting Office. The effect of the guidelines if implemented in fiscal year (FY) 1986 are estimated. The analysis was based on data on guaranty agencies' sources and uses of funds for FYs 1982-1985, as well as review of recent studies and meetings with Department of Education and guaranty agency officials. This information was used to develop a methodology for setting reserve levels and to analyze the potential effect of alternative reserve guidelines on agency reserves. It is suggested that guidelines should set separate reserve levels for each agency, taking into account the agency's potential to experience negative cash flow, which is largely determined by the value of its outstanding loan guarantee commitments and its single expense--claims paid to lenders. It is concluded that agency reserve limits could be set large enough to accommodate cash flow problems experienced in recent years, while not so large as to allow the accumulation of unnecessarily large reserves. Appendices include a list of guaranty agencies by state and information on the research methodology. (SW)