Introduced Version




Citations Affected: IC 20-12-21.2.

Synopsis: Student loans. Permits the Indiana Secondary Market for Education Loans, Inc. to become a direct lender of postsecondary loans. Allows the board of directors of the corporation to meet in executive session to protect proprietary business information. Repeals the secondary market sale fund.

Effective: Upon passage.


    January 9, 2006, read first time and referred to Committee on Education and Career Development.


Second Regular Session 114th General Assembly (2006)

PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
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    A BILL FOR AN ACT to amend the Indiana Code concerning education.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 20-12-21.2-1; (06)IN0230.1.1. -->     SECTION 1. IC 20-12-21.2-1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 1. As used in this chapter:
        (1) "corporation" refers to the corporation designated by the governor under section 2 of this chapter;
        (2) "education loan" means a loan insured or guaranteed under a federal or state program or a program of private insurance that is made to assist a student in obtaining postsecondary education and is:
            (A) made to any Indiana student, or either one (1) or both parents or the legal guardian of the student, for the purpose of attending an Indiana or non-Indiana institution;
            (B) made to any non-Indiana student, or one (1) or both parents or the legal guardian of the student, for the purpose of attending an Indiana institution or non-Indiana institution; or
            (C) made or owned by any lending institution with offices or

by any lending institution whose affiliate has an office located in Indiana or in a state in which an Indiana bank or an Indiana bank holding company is entitled under Indiana law to acquire a bank or bank holding company;
        (3) "lending institution" means an institution that makes or holds education loans; and
        (4) "federal program" means any program operated by the United States Secretary of Education under which the United States Secretary of Education provides guarantees or reinsurances of loans made to students or to either one (1) or both parents or the legal guardians of the students for the purpose of assisting students in obtaining postsecondary education.

SOURCE: IC 20-12-21.2-3; (06)IN0230.1.2. -->     SECTION 2. IC 20-12-21.2-3 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 3. (a) The corporation must, under its articles of incorporation, limit its powers to those described in subsection (b).
    (b) The corporation may:
        (1) borrow money;
        (2) purchase, sell, and retire education loans, if the loans are not in default status;
        (3) provide incentive services and payments, such as the payment of premiums for the purchase of education loans and the payment of an origination fee, to assist lending institutions that provide education loans;
        (4) loan funds to lending institutions if:
            (A) the lending institution agrees to use the funds to originate education loans of an amount equal to the loan made by the corporation over a period agreeable to the corporation and to grant the corporation the right of first refusal to purchase those education loans;
            (B) the lending institution agrees to use education loans or government securities as collateral for the loan; and
            (C) the corporation has, in response to its written request, received written authorization from the governor to exercise the power described in this subdivision;
        (5) establish after consultation with the associations representing the private lenders of the state and, at the direction of the governor, a direct lending program under which the corporation may make education loans to eligible borrowers under a federal program if the corporation determines that the borrowers cannot reasonably obtain an education loan from a lending institution in Indiana;
        (6) (5) make direct loans to or for the benefit of an education loan borrower; for the purpose of consolidating all or a portion of the borrower's outstanding education loans into one (1) loan;
        (7) (6) operate a secondary market for postsecondary education finance instruments, including tuition certificates and education savings certificates sold by or offered through lending institutions or educational institutions; and
        (8) (7) do all other things that are necessary or incidental to performing the functions listed in subdivisions (1) through (7). (6).
    (c) The corporation shall submit an annual report to the governor, which must include detailed information on the structure, operation, and financial status of the corporation. The corporation shall conduct an annual public hearing to receive comment from interested parties regarding the report. Notice of the hearing shall be given at least fourteen (14) days prior to the hearing in accordance with IC 5-14-1.5-5(b).
    (d) The corporation shall provide in its articles of incorporation that changes in the composition of its directors or in its bylaws are subject to the approval of the governor.
    (e) The corporation is subject to an annual audit by the state board of accounts. The corporation shall bear the full costs of this audit.
    (f) The board of directors of the corporation may meet in executive session to do any of the following:
         (1) Discuss negotiating strategies with respect to financing arrangements or proposals, in addition to those items listed in IC 5-14-1.5-6.1.
         (2) Discuss, prepare bids, or respond to proposals or arrangements for raising capital or acquiring assets.
        (3) Discuss and prepare competitive marketing strategies.
        (4) Engage in strategic planning.

    (g) Any or all members of the board of directors may participate in a meeting of the board by means of a conference telephone or similar communications equipment by which a member can communicate with each of the other board members if at least three (3) board members are present at the meeting. Participation by these means does not violate IC 5-14-1.5.
    (h) The corporation and its transferees and pledgees, so long as they are eligible lenders under a federal program, are entitled to the benefits of any guaranty given by the state student assistance commission under IC 20-12-21.1 or any successor to the state student assistance commission with respect to education loans owned or held by the

corporation, its transferees, or its pledgees, as long as the corporation, its transferees, or its pledgees are eligible lenders or holders of education loans under the rules adopted under IC 4-22-2 by the state student assistance commission or a successor to the state student assistance commission.
    (i) Notwithstanding any other law, the commission corporation may not make grants for any purpose without approval by the budget agency and the governor after review by the budget committee.

SOURCE: IC 20-12-21.2-10; (06)IN0230.1.3. -->     SECTION 3. IC 20-12-21.2-10 IS REPEALED [EFFECTIVE UPON PASSAGE].
SOURCE: ; (06)IN0230.1.4. -->     SECTION 4. An emergency is declared for this act.