HB1311ham001 99TH GENERAL ASSEMBLY

Rep. Jack D. Franks

Filed: 3/23/2015

09900HB1311ham001 LRB099 05946 SXM 33224 a

AMENDMENT TO HOUSE BILL 1311

AMENDMENT NO. ______. Amend House Bill 1311 by replacing everything after the enacting clause with the following:

"Section 1. Short title. This Act may be cited as the Affordable College Financing Pilot Program Act.

Section 5. Findings. The General Assembly finds that many students and families struggle to afford the costs of college despite the programs available to assist them. Grant assistance and federal student loans, while offering critical financial support for students, are often insufficient to cover the full cost of attendance, particularly at the university level. In order to make State universities more accessible to Illinois students and to temper the challenges associated with student debt, the General Assembly hereby establishes a pilot, income-based student loan program to finance costs of attendance that are not funded by grants or federal student aid and that exceed a family's ability to pay. The loan is intended to be repaid on a schedule designed to be affordable for the borrower, with payments based on the borrower's income.

Section 10. Definitions. In this Act:

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

"Cost of attendance" means the cost of attending a State university.

"Commission" means the Illinois Student Assistance Commission.

"Eligible student" means a person who is a resident of this State and has been accepted to or is enrolled in a State university and who has remaining need, as defined in this Section.

"Expected family contribution" is the federally determined share of family income that can be expected to be used for college.

"Fund" means the Affordable College Financing Pilot Program Fund.

"Program" means the pilot program established under this Act.

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

"Remaining need" is defined as the part of the cost of attendance not covered by the expected family contribution, grants, or federal Stafford loans.

Section 15. Pilot program.

(a) Subject to the appropriation of funds for this purpose, the Commission shall implement and administer a pilot program to provide loans to 400 eligible students under this Act. The Commission shall conduct a lottery to determine which qualified applicants are to be awarded program loans in accordance with this Act. The lottery will be based on a stratified random sample to ensure equal participation by students in each of the 4 lower-income quintiles that are based on Illinois income data reported annually by the U.S. Census Bureau. Once a student has gained entry into the program, the loans will be available annually, as needed, for 4 years. These program loans are to be repaid, beginning 6 months after the borrower leaves school, on a schedule that is based on the income of the borrower.

(b) The Affordable College Financing Pilot 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 Commission for awarding program loans and administering the program 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. The Commission may additionally develop and require a separate application for a program loan. The program loan application shall be in such form as required by the Commission and shall include such information as required by the Commission. The Commission 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. Loans may be issued only from available funds.

(d) The amount of a program loan shall be sufficient to cover the student's remaining need, as defined in Section 10.

(e) The Commission may not charge interest on a program loan, but may charge a default insurance premium as provided in 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 Commission, subject to the following:

(1) Repayment shall commence not later than 6 months after the eligible student leaves the State university. The Commission may establish rules for deferment and forbearance consistent with federal guidelines.

(2) The monthly amount required to be repaid shall be based on a repayment schedule that the Commission shall by rule develop and shall be based on a percentage of the borrower's adjusted gross income.

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

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

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

(i) The Commission 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 20. Progress reports. The Commission 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. The Commission shall track average cumulative debt and year-to-year student retention, and compare these numbers to a control group of similar students not participating in the program. The Commission shall also track and report the progress of borrowers throughout the repayment period.

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

Section 95. The State Finance Act is amended by adding Section 5.866 as follows:

(30 ILCS 105/5.866 new)

Sec. 5.866. The Affordable College Financing Pilot Program Fund.

Section 99. Effective date. This Act takes effect upon becoming law.".