Senate Bill No. 570
(By Senator Boley, Sprouse)
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[Introduced March 23, 2001; referred to the Committee on
Education; and then to the Committee on Finance.]
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A BILL to amend and reenact sections one, two, three, four, five,
six, seven, eight and nine, article twenty-two-d, chapter
eighteen of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, all relating to establishing
the "West Virginia Dollars for Scholars Program"; providing
low-cost loans to West Virginia high school students with a
"c" average or better who will be attending a college or
university in this state; and forgiveness of loan when
continuing West Virginia residency upon graduation.
Be it enacted by the Legislature of West Virginia:
That sections one, two, three, four, five, six, seven, eight
and nine, article twenty-two-d, chapter eighteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be
amended and reenacted, all to read as follows:
ARTICLE 22D. WEST VIRGINIA DOLLARS FOR SCHOLARS LOAN PROGRAM.
§18-22D-1. Legislative purpose.
The Legislature finds that the percentage of the population in
this state attending college is substantially lower than the
national average; that higher education in this age of advanced
technology is a key element in the efforts to invigorate and
develop the economy of our state; that opportunities for students
attending a college or university in this state are diminished
because of limited access to programs of financial assistance; and
that the cost of attending college has dramatically increased and
has become a great burden upon family budgets.
It is therefore the policy of the Legislature to establish a
state higher education student assistance loan program the "West
Virginia Dollars For Scholars Program" to guarantee that deserving
residents of this state have the opportunity to continue their
education at an approved institution of higher education of their
choice in this state.
§18-22D-2. Definitions.
The following words when used in this article have the meaning hereinafter ascribed to them, unless the context clearly indicates
a different meaning As used in this article:
(a) "Board" or "governing board" means the university of West
Virginia board of trustees or the board of directors of the state
college system, whichever is applicable within the context referred
to in this article, unless the context clearly indicates a
different meaning institutional board of governors.
(b) "Eligible lending institution" or "institution" means a
financial institution that is eligible to make commercial loans, is
a public depository of state funds and agrees to participate in the
West Virginia higher education student assistance loan program
dollars for scholars loan program.
(c) "Eligible student" means any individual who:
(1) Is a citizen or eligible noncitizen of the United States;
(2) Has been a resident of the state for at least one year
immediately preceding the date of application for a West Virginia
higher education student assistance loan;
(3) Is currently enrolled in good standing or Is graduating
from a West Virginia high school with a "c" average or better and
is accepted for enrollment at the an approved institution of
higher education in this state of the student's choice,; and
(4) Is certified by such institution in accordance with
section three of this article.
(d) "Linked deposit" means a certificate of deposit placed by
the state board of investments investment management board with an
eligible lending institution at three percent below current market
rates, as determined and calculated by the state board of
investments a rate to provide a two percent per year loan, provided
the institution agrees to lend the value of such deposit, according
to the deposit agreement provided for by this article, to eligible
students at three percent below the present borrowing rate
applicable to each such student at the time of the deposit of state
funds in the institution a rate of two percent per year.
(e) "Approved institution of higher education in this state"
means nonprofit, degree-granting two-year and four-year colleges
and universities located in West Virginia.
§18-22D-3. Certification of eligibility; information as to other
financial assistance; approval of maximum loan
amount.
(a) The board of regents shall have full authority to
administer the program in accordance with the provisions of this
article. In furtherance of such administration, the board shall approve institutions of higher education in this state for
participation in the loan program, establish guidelines for use by
such institutions in determining which applicants are eligible
students and in calculating the maximum loan amounts, and develop
a uniform eligibility certification and maximum loan amount form to
be used by the applicant and the approved institution of higher
education in determining and certifying eligibility and maximum
loan amounts. The board shall further provide information as to
the federal guaranteed student loan program and other financial
assistance which may be available to the applicant, which
information shall be conveyed to such applicants by the approved
institution of higher education.
(b) Upon receipt of an applicant's certification form, the
approved institution of higher education shall review such form,
certify any student who meets the eligibility guidelines
promulgated by the board and indicate on such form the maximum loan
amount which may be received by the applicant pursuant to this
article. The institution shall calculate such amount with
consideration to any other financial assistance which is or will be
received by the applicant and shall assist such applicant in
receiving such other financial assistance. In no case shall the annual loan amount to an eligible student exceed six thousand
dollars for undergraduate study or ten thousand dollars for
graduate or professional study two thousand five hundred dollars
per year, and the eligible student shall receive not more than five
such loans for undergraduate study and three such loans for
graduate or professional study. Any applicant who is not certified
as eligible shall be notified in writing as to the reasons for
which certification was not granted.
(c) Any applicant who is denied eligibility certification or
has a maximum loan amount approved which is less than the applicant
reasonably believes is required for attendance at the approved
institution of higher education may request in writing to the board
a hearing on any such matter. The board may conduct such hearing
or may respond in writing as to the reasons such hearing is denied.
Any decision by the board regarding eligibility or maximum loan
amount shall be final.
§18-22D-4. Limitations on investment in linked deposits.
The state board of investments investment management board
shall invest in linked deposits as identified by the board through
an approved application, provided that at the time of placement of
the linked deposit, exclusive of the linked deposit program provided for in article one-a, chapter twelve of this code, not
more than two percent of the state's total investment portfolio is
so invested. The total amount initially deposited in any one year
shall may not exceed two five million dollars, and the total amount
so deposited at any one time shall not exceed, in the aggregate,
twenty thirty million dollars.
§18-22D-5. Applications for loans; loan package.
(a) An eligible lending institution that desires to receive a
linked deposit shall accept and review applications for loans from
applicants certified as eligible students. The lending institution
shall apply all usual lending standards to determine the credit
worthiness of each eligible student. In no case shall the
applicant request, nor the eligible lending institution approve, an
annual loan amount in excess of the maximum amount indicated on the
form certifying such applicant as an eligible student.
(b) An eligible student shall certify on the loan application
that the reduced rate loan will be used exclusively to attend an
approved institution of higher education in this state. Whoever
knowingly makes a false statement concerning such application shall
be prohibited from entering into the West Virginia higher education
student assistance loan program dollars for scholars loan program. Whoever knowingly uses loan proceeds received pursuant to this
article for reasons other than attendance at an approved
institution of higher education shall be prohibited from
benefitting from the linked deposit, which deposit shall be
withdrawn upon maturity, and the loan shall revert to the rate of
market interest originally determined.
(c) Upon approval of all or any portion of the loan amount
requested for which a linked deposit is sought, the eligible
lending institution shall forward to the board a linked deposit
loan package, in such form and manner as shall be prescribed by the
state board of investments investment management board in
cooperation with the board. The package shall include such
information as may be needed by the board or the state board of
investments investment management board including the certification
form and the amount of the loan requested by the eligible student.
The eligible lending institution shall certify, for each eligible
student, the present borrowing rate applicable to such student.
§18-22D-6. Acceptance or rejection of loan package; deposit
agreement.
(a) The board may approve or reject a linked deposit loan
package. Upon approval by the board of the linked deposit loan package, the board shall forward such approved application to the
state board of investments investment management board and the
state board of investments investment management board shall place
certificates of deposit, within the limitations provided for in
section four of this article, with the eligible lending institution
at three percent below current market rates, as determined and
calculated by the state board of investments a rate to provide a
two percent per year loan
.
(b) The eligible lending institution shall enter into a
deposit agreement with the state board of investments investment
management board, which shall include requirements necessary to
carry out the purposes of this article. Such requirements shall
reflect the market conditions prevailing in the eligible lending
institution's lending area. The agreement may include a
specification of the period of time in which the eligible lending
institution is to lend funds after the placement of a linked
deposit and shall include provisions for the certificates of
deposit to be placed for up to two-year maturities that may be
renewed for periods up to two years until such time as the loan has
been completely repaid, or ten and one-half years after the
eligible student's cessation of enrollment in the approved institution of higher education to which the loan proceeds were
paid, whichever is sooner. Interest shall be paid at the times
determined by the state board of investments.
§18-22D-7. Rate of loan; repayment.
(a) Upon placement of a linked deposit with an eligible
lending institution, such institution is required to lend such
funds to each approved eligible student listed in the linked
deposit loan package required in subsection (c), section five of
this article, and in accordance with the deposit agreement required
by subsection (b), section six of this article. The loan shall be
at three percent below the present borrowing rate applicable to
each eligible student a rate of two percent per year.
(b) Upon request therefor and approval thereof, the loan
agreement may require repayment of interest only, until such time
as the eligible student commences repayment of the principal. Such
repayment of the principal shall commence at or before such time as
the eligible student is no longer enrolled in the approved
institution of higher education for which the loan proceeds were
paid or within five years of receipt of the loan, whichever is
sooner: Provided, That an eligible student who enrolls in graduate
or professional school subsequent to the enrollment for which a loan or loans were received pursuant to this section may defer such
repayment time until completion or withdrawal from the graduate or
professional school.
(c) A person receiving a student loan under this program is
eligible for loan forgiveness if he or she graduates from an
approved institution of higher education in this state and
continues to reside in this state upon graduation. If a person
continuously resides in this state upon graduation for a period of
not less than one year nor more than five years
, his or her loan
shall be forgiven in an amount equal to twenty percent of the total
loan amount for each full year of continuous residence. A person
discontinuing West Virginia residency prior to complete forgiveness
of a loan shall begin payment on the remaining loan balance within
six months of discontinuing residency under the terms and
conditions of the loan agreement.
(c) (d) Notwithstanding the time in which the eligible lending
institution may provide for the repayment of the loan, the linked
deposit shall be terminated at the maturity date next succeeding
complete repayment or ten and one-half years after cessation of
enrollment, whichever is sooner. The amount of interest on the
loan shall revert to the market rate originally determined at such time as the linked deposit is withdrawn.
§18-22D-8. Certification and monitoring of compliance; reports.
(a) A certification of compliance with any applicable
provisions of this article, in such form and manner as shall be
prescribed by the state board of investments investment management
board in cooperation with the board, shall be required of the
eligible lending institution.
The senior administrator jointly employed by the West Virginia
board of trustees and the board of directors of the state college
system board, in cooperation with the state board of investments
investment management board, shall monitor compliance by the
eligible student with the applicable provisions of this article and
may take whatever action may be deemed necessary in furthering the
intent of the student loan program.
(b) By the first day of January, April, July and October of
each year, the board of investments state investment management
board shall report on the linked deposit program for the preceding
calendar quarter to the governor, the joint committee on government
and finance, and the board. The reports shall set forth the linked
deposits made by the state board of investments investment
management board under the program during the quarter and shall include information regarding the nature, terms and amounts of the
loans upon which the linked deposits were based and the eligible
students to which the loans were made.
§18-22D-9. Liability.
The state, the governing boards and the state board of
investments investment management board are not liable to any
eligible lending institution in any manner for payment of the
principal or interest on the loan to an eligible student. Any
delay in payment or default on the part of an eligible student does
not in any manner affect the deposit agreement between the eligible
lending institution and the state board of investments investment
management board.
NOTE: The purpose of this bill is establish the "West
Virginia Dollars For Scholars Loan Assistance Program" to provide
low cost loans to West Virginia high school students with a "c"
average or better who will be attending a college or university in
this State. A person remaining in West Virginia upon graduation is
eligible for loan forgiveness in an amount equal to twenty percent
of the loan for each year of continuous residency in the State.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
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