PUBLIC Law, Chapter 34, An Act To Authorize the Provision of Insurance on Student Loans

An Act To Authorize the Provision of Insurance on Student Loans

Emergency preamble. Whereas, acts and resolves of the Legislature do not become effective until 90 days after adjournment unless enacted as emergencies; and

Whereas, Maine students and families need more options to finance higher education as soon as they can be made available; and

Whereas, if the availability of student loans is uncertain, students may choose not to attend an institution of higher education or may choose to borrow funds that will not feature the advantages of student loans insured by the Finance Authority of Maine, and students and their families may be adversely affected; and

Whereas, in the judgment of the Legislature, these facts create an emergency within the meaning of the Constitution of Maine and require the following legislation as immediately necessary for the preservation of the public peace, health and safety; now, therefore,

Be it enacted by the People of the State of Maine as follows:

Sec. 1. 10 MRSA §962, first ¶, as amended by PL 1985, c. 344, §5, is further amended to read:

There is a statewide need to provide enlarged opportunities for gainful employment to the people of the State and to insure ensure the preservation and betterment of the economy and the general health, safety and welfare of the State and its inhabitants; to provide a more healthy environment through the restoration of purity to the air, the water or the earth of the State which are fouled with, among other things, industrial and other waste materials and pollutants, and to insure ensure the preservation and betterment of the living standards and health of its inhabitants; to stimulate a larger flow of private investment funds from banks, investment institutions, insurance companies and other financial institutions, including pension and retirement funds, to help finance planning, development, acquisition, construction, improvement, expansion and placing in operation of industrial, manufacturing, recreational, fishing, agricultural, business and natural resource enterprises and eligible projects of the State and its political subdivisions; and to increase the access of smaller business and , veterans and students pursuing postsecondary education to financing at reasonable terms and rates.

Sec. 2. 10 MRSA §969-A, sub-§3, as enacted by PL 1985, c. 344, §17, is amended to read:

3. Insure. Insure or guarantee performance of any loan agreement or other obligation , including taking all actions necessary to implement and administer a program of insurance for loans to students pursuing postsecondary education;

Sec. 3. 10 MRSA §1013, sub-§13, as amended by PL 1997, c. 97, §3, is further amended to read:

13. Higher Education Loan and Loan Insurance Program. The Higher Education Loan and Loan Insurance Program, as established in Title 20-A, chapter 417-C;

Sec. 4. 20-A MRSA §11458, as enacted by PL 1991, c. 824, Pt. A, §35, is amended to read:

§ 11458. Program established

There is established the Higher Education Loan and Loan Insurance Program, administered by the Finance Authority of Maine, to carry out the purposes of this chapter.

Sec. 5. 20-A MRSA §11460, as enacted by PL 1991, c. 824, Pt. A, §35, is amended to read:

§ 11460. Eligibility

Loans made or insured under this chapter are available only to or for the benefit of a resident of the State or an individual attending an institution of higher education in the State who:

1. Graduated. Has graduated from an approved secondary school, matriculated at a postsecondary school prior to high school graduation or successfully completed a high school equivalency diploma or its equivalent;

2. Accepted. Has been accepted for enrollment as an undergraduate or graduate student or is in good standing as an undergraduate or graduate student at an institution of higher education in an eligible program of study and has not previously received the degree for which the student is enrolled;

3. Application. Has applied for a loan under the program according to schedules and procedures and on forms specified by the authority and has provided or caused to be provided all information determined necessary by the authority in order to determine eligibility;

4. Unmet need. Has been determined by the authority to have an unmet need for financial assistance that, if not met, will prevent the student from attending the institution of higher education of that student's choice;

5. Residency. Meets the state residency or school attendance requirements that may be established by the authority by rule;

6. Loan repayment. Has been determined by the authority to have a reasonable prospect of being able to repay the loan. In appropriate cases, the authority may allow repayments to be deferred and subordinated to repayment of other student loans for such period of time as may be necessary for the borrower to be able to afford to repay the loan; and

7. Minimum academic progress. Is maintaining a grade point average of at least 2.0 on a scale of 4.0, or the equivalent as determined by the authority, provided, however, that the authority may waive the minimum grade point average in the case of a student demonstrating special circumstances and a substantial likelihood of improvement making satisfactory academic progress in accordance with the standards of that institution of higher education.

Sec. 6. 20-A MRSA §11461, as enacted by PL 1991, c. 824, Pt. A, §35, is amended to read:

§ 11461. Higher Education Loan and Loan Insurance Program Fund

1. Establishment. The Higher Education Loan and Loan Insurance Program Fund is established to be used by the authority as a nonlapsing, revolving fund for carrying out this chapter. In its discretion, the authority may combine this fund with other funds of the authority for accounting purposes and may establish separate accounts for loans and for a reserve for loan default payments. Money in the fund currently not needed to meet the obligations of the authority as lender or insurer is deposited with the authority to the credit of the fund or may be invested as provided by law.

2. Charges and credits. All amounts received or allocated by the authority for deposit to the fund pursuant to this chapter or otherwise must be deposited in the fund. All expenses of the authority in carrying out this chapter, including interest, principal and fee payments required by loan defaults, must be charged to the fund , except that bond proceeds and principal repayments must be used only for loans and not for administrative expenses of the program or other current expenditures. The authority's liability for those expenses is limited to the fund.

Sec. 7. 20-A MRSA §11463 is enacted to read:

§ 11463. Insure student loan payments

The authority may make commitments and agreements to insure student loan payments.

1. Loan serviced. A loan insured by the authority must be serviced as required by the authority.

2. Compliance. A loan insured by the authority must be in compliance with the student loan insurance credit policy of the authority.

3. Other terms. A loan insured by the authority may be subject to terms other than those specified in subsections 1 and 2 as may be required by law or by rule of the authority.

4. Financial education. Prior to obtaining a loan insured by the authority, an applicant must satisfy financial education requirements established or approved by the authority.

Sec. 8. Maine Revised Statutes headnote amended; revision clause. In the Maine Revised Statutes, Title 20-A, chapter 417-C, in the chapter headnote, the words "higher education loan program" are amended to read "higher education loan and loan insurance program" and the Revisor of Statutes shall implement this revision when updating, publishing or republishing the statutes.

Emergency clause. In view of the emergency cited in the preamble, this legislation takes effect when approved.

Effective 90 days following adjournment of the 126th Legislature, First Regular Session, unless otherwise indicated.

SP0131 LD 351	PUBLIC Law, Chapter 34 on - Session - 126th Maine Legislature
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