HB1311 99TH GENERAL ASSEMBLY

LRB099 05946 NHT 25995 b

99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB1311

Introduced , by Rep. Jack D. Franks

SYNOPSIS AS INTRODUCED:

New Act
30 ILCS 105/5.866 new

Creates the Pay It Forward, Pay It Back Act and amends the State Finance Act. Establishes, for 5 academic years, a program to provide loans to 400 eligible students per academic year to attend a public community college or university, to be repaid, in part, according to the income of the student borrowers. Provides that the Department of Revenue shall implement and administer the program. Creates the Pay It Forward, Pay It Back Program Fund as a special fund in the State treasury, with moneys used for the sole purpose of awarding program loans under the Act. Sets forth provisions governing the application process and loan repayment. Requires the Department to submit progress reports to the General Assembly. Effective immediately.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning education.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Pay It Forward, Pay It Back Act.

Section 5. Definitions. As used in this Act:

"Borrower" means a person who has been awarded and accepts a program loan under this Act.

"Covered tuition" means the total sum charged for the credits required for attendance at an institution of higher learning for a full-time undergraduate academic period. "Covered tuition" includes fees and other charges customarily imposed on all students, but does not include charges for room and board, books, or supplies.

"Department" means the Department of Revenue.

"Eligible student" means a person who is a resident of this State and has been accepted to or enrolled in an institution of higher learning and whose household income is below the top 20% of household incomes in this State.

"Fund" means the Pay It Forward, Pay It Back Program Fund.

"Institution of higher learning" means a public community college or public university located in this State.

"Program" means the Pay It Forward, Pay It Back Pilot Program established under this Act.

"Program loan" means a loan awarded by the Department to an eligible student under the program.

Section 10. Pay It Forward, Pay It Back Pilot Program.

(a) The Pay It Forward, Pay It Back Pilot Program is established for 5 academic years to provide loans to 400 eligible students per academic year under this Act. The Department shall conduct a lottery to determine which qualified applicants are to be awarded program loans in accordance with this Act. These program loans are to be repaid, in part, according to the income of the borrowers. The Department shall implement and administer the program.

(b) The Pay It Forward, Pay It Back Program Fund is created as a special fund in the State treasury. All money in the Fund shall be used, subject to appropriation, by the Department for the sole purpose of awarding program loans under this Act. The Fund shall consist of the repayment of program loans, interest earned on the moneys in the Fund, and other funds appropriated or made available to the Fund.

(c) An eligible student must complete the Free Application for Federal Student Aid in order to apply for a program loan. An eligible student shall submit an application to the Department for a program loan, which must be made in conjunction with completion of the Free Application for Federal Student Aid. Loans may be issued only from available funds. The program loan application shall be in such form as required by the Department and shall include household income and such other information as required by the Department. The Department shall review the application and, if satisfied that the applicant is an eligible student and is not ineligible for loan assistance under subsections (a) and (b) of Section 35 of the Higher Education Student Assistance Act, shall award a program loan to the applicant if selected by lottery.

(d) The amount of a program loan shall be equal to 100% of covered tuition.

(e) The Department may not charge interest on a program loan, but may charge interest as provided in paragraph (6) of subsection (f) of this Section.

(f) By accepting a program loan, an eligible student shall agree to repay the amount of the program loan, plus a default insurance premium amount to be determined by the Department, subject to the following:

(1) Repayment shall commence not later than one year after the eligible student graduates from the institution of higher learning or becomes employed full-time, whichever occurs first. The one-year period may be extended by the Department if the borrower can demonstrate to the satisfaction of the Department that the borrower has made a good faith effort to obtain full-time employment but has been unable to do so. The duration of the extension shall be determined at the sole discretion of the Department.

(2) The monthly amount required to be repaid shall be based on a repayment schedule that the Department shall by rule develop and shall be based on a percentage of the borrower's adjusted gross income. The percentage for a borrower who has attended a public community college shall be less than the percentage for a borrower who has attended a public university, with borrowers who attended a public community college but transferred to a public university paying the community college percentage for that portion borrowed for community college attendance and the university percentage for the remainder.

(3) If at any time during the repayment period the borrower leaves the work force, except in the case of a disability, the monthly amount required to be repaid shall be based on one-half of the estimated annual taxable income of the borrower that is reportable to the Department, subject to the limitation specified in item (2) of this subsection (f).

(4) Monthly payments shall continue until the borrower has fully paid the amount of the program loan and the default insurance premium amount.

(5) The Department may defer repayment during any time period that the borrower is enrolled full-time or part-time in a postgraduate degree program.

(6) Award recipients who either leave or are dismissed from the institution of higher learning prior to graduation shall pay to the State the amount borrowed under the program, together with interest on that amount at a rate as determined by the Department.

(g) To administer the program, the Department may exercise the same powers of collection as otherwise authorized by law.

(h) The Department shall forgive the repayment of a program loan if the borrower dies or becomes disabled.

(i) The Department may establish and administer, or contract with a third party to do so, a default insurance plan for program loans in which eligible students have defaulted on repayment of their program loans.

Section 15. Progress reports. The Department shall submit a progress report to the General Assembly 2 years after implementation of the program and 4 years after implementation of the program. The report shall describe the financial stability of the Fund and student success metrics utilized, both for initial loan awards and loan continuances within the program.

Section 90. Rules. The Department may adopt any rules necessary to carry out its responsibilities under this Act.

Section 100. The State Finance Act is amended by adding Section 5.866 as follows:

(30 ILCS 105/5.866 new)

Sec. 5.866. The Pay It Forward, Pay It Back Program Fund.

Section 999. Effective date. This Act takes effect upon becoming law.