Introduced Version






HOUSE BILL No. 1604

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DIGEST OF INTRODUCED BILL



Citations Affected: IC 20-12-78.

Synopsis: University selection of preferred lenders. Prohibits the lenders of private student loans from making gifts to state educational institutions. Prohibits the employees of state educational institutions and foundations established for the benefit of state educational institutions from accepting from a lender gifts having a total value of more than $100 in a calendar year. Requires the attorney general to enforce the prohibitions. Establishes the conditions under which a state educational institution may designate a lender of private student loans as a preferred lender. Imposes civil penalties upon lenders that make prohibited gifts. Requires a state educational institution that violates the new provisions to forfeit an amount equal to 1% of the tuition charged to students in the preceding academic year. Requires penalties and forfeitures to be paid to the state student assistance commission for scholarships. Makes an appropriation.

Effective: July 1, 2007.





Cherry




    January 23, 2007, read first time and referred to Committee on Education.







Introduced

First Regular Session 115th General Assembly (2007)


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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HOUSE BILL No. 1604



    A BILL FOR AN ACT to amend the Indiana Code concerning education finance and to make an appropriation.

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

SOURCE: IC 20-12-78; (07)IN1604.1.1. -->     SECTION 1. IC 20-12-78 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]:
    Chapter 78. Prohibited Actions Concerning Lenders of Private Student Loans
    Sec. 1. As used in this chapter, "private student loan" refers to a loan that:
        (1) is issued by a private lender; and
        (2) is not guaranteed under the guaranteed student loan program (IC 20-12-21.1) or the federal family education loan program (20 U.S.C. 1071 et seq.).
    Sec. 2. As used in this chapter, "state educational institution" has the meaning set forth in IC 20-12-0.5-1.
    Sec. 3. For purposes of this chapter, two (2) or more lenders who are related or affiliated by at least twenty-five percent (25%) common ownership are considered a single lender.
    Sec. 4. (a) A state educational institution may not designate a

lender of private student loans as a preferred lender unless the state educational institution:
        (1) designates at least four (4) other lenders as preferred lenders;
        (2) offers each student a list describing other loan or financing options available from other lenders that the state educational institution knows to exist; and
        (3) provides business contact information for both the preferred lenders and the lenders described on the list required under subdivision (2).
    (b) The criteria that a state educational institution uses to designate a preferred lender may not include the amount of federally guaranteed student loans made by a lender to students enrolled in the state educational institution.
    (c) A state educational institution may not take any action to interfere with a student's ability to do business with a lender that is not designated by the state educational institution as a preferred lender.
    Sec. 5. A:
        (1) state educational institution; or
        (2) foundation established for the benefit of a state educational institution;
may not accept a gift from a lender of private student loans.
    Sec. 6. An employee of a:
        (1) state educational institution; or
        (2) foundation established for the benefit of a state educational institution;
may not accept from a lender of private student loans gifts that have an aggregate value of more than one hundred dollars ($100) in a particular calendar year.
    Sec. 7. (a) A state educational institution may not offer space or any other assistance to a lender of private student loans unless the state educational institution offers comparable space or assistance to other lenders at the same price and under reasonably the same conditions.
    (b) A state educational institution may not condition an offer of space or other business assistance to a lender of private student loans on any of the following:
        (1) The number of private student loans issued by the lender.
        (2) The aggregate amount of private student loans issued by the lender.
        (3) The corporate size of the lender.


    Sec. 8. (a) A lender of private student loans may not make a gift to a:
        (1) state educational institution; or
        (2) foundation established for the benefit of a state educational institution.
    (b) A lender of private student loans may not make a gift to an employee of a:
        (1) state educational institution; or
        (2) foundation established for the benefit of a state educational institution;
that exceeds the amount permitted by section 6 of this chapter.
    Sec. 9. The attorney general shall enforce the provisions of this chapter.
    Sec. 10. (a) If, after a hearing, the attorney general finds by a preponderance of the evidence that a state educational institution has violated the provisions of this chapter, the state educational institution shall forfeit an amount equal to one percent (1%) of the tuition charged to the students enrolled in the state educational institution in the preceding academic year.
    (b) An amount forfeited under subsection (a) shall be paid to the state student assistance commission.
    Sec. 11. (a) If, after a hearing, the attorney general finds by a preponderance of the evidence that a lender of private student loans has violated section 8 of this chapter, the attorney general shall impose a civil penalty upon the lender in an amount determined by the attorney general. The amount determined under this subsection may not exceed the amount described in subsection (c)(1).
    (b) The attorney general may add the following to the amount of any civil penalty determined under subsection (a):
        (1) One thousand dollars ($1,000) for a lender's first violation of section 8 of this chapter.
        (2) Two thousand five hundred dollars ($2,500) for a lender's second violation of section 8 of this chapter.
        (3) Five thousand dollars ($5,000) for each additional violation by a lender of section 8 of this chapter.
    (c) A civil penalty imposed on a lender under this section may not exceed the sum of:
        (1) an amount equal to three (3) times the aggregate value of all gifts made by the lender in violation of section 8 of this chapter; plus
        (2) the additional amount added to the civil penalty under

subsection (b).
    (d) A civil penalty imposed under this section shall be paid to the state student assistance commission.
    Sec. 12. (a) Money paid to the state student assistance commission under this chapter must be used to provide scholarships to students enrolled in institutions of higher learning (as defined in IC 20-12-70-4).
    (b) Money paid to the state student assistance commission under this chapter is continuously appropriated for the purpose set forth in subsection (a).
    Sec. 13. A contract entered into before July 1, 2007, containing terms that violate the provisions of this chapter is:
        (1) against public policy; and
        (2) void and unenforceable.