Amended in Senate March 24, 2014

Senate Bill No. 1210

Introduced by Senator Lara

February 20, 2014

An act begin insert to add Article 23 (commencing with Section 70030) to Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code, end insert relating to postsecondary education.

LEGISLATIVE COUNSEL’S DIGEST

SB 1210, as amended, Lara. begin delete Postsecondary educational loan program. end delete begin insert Postsecondary education: California Student Education Access Loan Program. end insert

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Existing law establishes the University of California, under the administration of the Regents of the University of California, and the California State University, under the administration of the Trustees of the California State University, as 2 of the segments of public postsecondary education in this state. Existing law authorizes the regents and the trustees to require that mandatory systemwide fees and tuition, among other fees, be paid by students at campuses of the University of California and the California State University, respectively.

end insert begin insert

This bill would establish the California Education Access Loan Program. The bill would provide that, commencing with the 2015-16 academic year, a student attending a participating campus of the University of California or California State University may receive a loan, referred to as a State Education Access Loan (SEAL), through the program if the student satisfies specified requirements, including a requirement that the student be exempt from paying nonresident tuition or meet equivalent requirements adopted by the regents. The bill would require the Student Aid Commission, in collaboration with the participating campus, to certify that the student satisfies these requirements. The bill would require the student to affirm in writing that he or she satisfies one of these requirements, and would require the student to authorize the commission to access any information pertinent to certify that the student satisfies these requirements. The bill would require a participating campus to determine the amount of the loan offered to an individual student by the campus, subject to enumerated specifications.

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The bill would state the intent of the Legislature that funds shall be appropriated in the annual Budget Act each fiscal year, commencing with the 2015-16 fiscal year, to participating campuses based upon the number of eligible students attending each respective campus who submitted a specified financial aid application during the prior academic year. The bill would require a participating campus to deposit these funds in a SEAL revolving fund established by each campus, subject to specified exceptions. The bill would require each participating campus to contribute its discretionary funds into its SEAL revolving fund so that the campus’s contribution equals or exceeds 25% of all funds in the campus’s SEAL revolving fund at the start of each academic year before SEAL loans are awarded for that academic year. The bill would require the California State University and the University of California to annually report to the Legislature as part of their respective annual financial aid reports the dollar amount of each SEAL loan awarded and number of students for whom a SEAL loan was awarded that academic year.

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The bill would require a participating campus to determine a student’s eligibility for a SEAL loan, award SEAL loans to students, and establish mechanisms for recording the annual amount of the SEAL loan borrowed by each recipient, and the aggregate amount of SEAL loans borrowed by each recipient.

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The bill would provide that each participating campus is entitled to an administrative cost allowance to equal a specified amount for an award year if the campus advances funds through the SEAL program to students that academic year.

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The bill would provide that if a state court finds that a specified provision of this program or similar provision adopted by the Regents of the University of California is unlawful, the court may order, as equitable relief, that the participating campus subject to the lawsuit terminate all loans awarded pursuant to that provision without money damages, loans, or other retroactive relief being awarded, and that the California State University and the University of California are immune from any imposition of money damages, loans, or other retroactive relief for actions taken under this program.

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The Donahoe Higher Education Act establishes the missions and functions of the state’s 3 segments of public postsecondary education, which are the University of California, the California State University, and the California Community Colleges. The provisions of the Donahoe Higher Education Act apply to the University of California only to the extent that the Regents of the University of California, by resolution, make them applicable.

end delete begin delete

This bill would express the intent of the Legislature to enact legislation later in the 2013-14 Regular Session to establish a postsecondary educational loan program for students at the University of California and the California State University who are exempt from nonresident tuition and not eligible to participate in federal loan programs.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

end insert

begin insert This act shall be known, and may be cited, as the
California State Education Access Loan Act. end insert

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begin insert SEC. 2. end insert   

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The Legislature finds and declares all of the following:

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(a) California has expanded access to higher education for
thousands of hard-working, high-achieving students who attended
and graduated from a California high school but were ineligible
to pay in-state tuition and fees to attend a campus of the California
State University and the University of California, including many
students who were denied access to state financial aid or financial
aid offered at these campuses.

end insert begin insert

(b) Since 2002, students have been exempt from paying
nonresident tuition and fees at the California Community Colleges,
the California State University, and the University of California
pursuant to Section 68130.5. Commencing in 2011, these students
were eligible for state financial aid or financial aid offered by
these public institutions. Nevertheless, many of these students
remain ineligible for federal student aid for reasons beyond their
control. Lack of access to federal student loans presents a
substantial barrier for these students to obtain a baccalaureate
degree from the California State University or the University of
California.

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(c) The California State Education Access Loan Act (California
SEAL Act) addresses this barrier by providing access to additional
state aid so students may take full advantage of the educational
opportunities offered at the California State University and the
University of California.

end insert begin insert

(d) The California SEAL Act represents an important step in
the state’s ongoing efforts to provide access to all academically
qualified students pursuing the dream of a college or university
degree. Through the enactment of this measure, California will
keep faith with the state’s longstanding promise to make higher
education accessible and affordable to every qualified student.

end insert

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begin insert SEC. 3. end insert   

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begin insert Article 23 (commencing with Section 70030) is added
to Chapter 2 of Part 42 of Division 5 of Title 3 of the end insert begin insert Education
Code end insert begin insert , to read: end insert

begin insert

 

Article begin insert 23. end insert   California Student Education Access Loan Program

 

begin insert 70030. end insert   

This article shall be known, and may be cited, as the
California Student Education Access Loan Program.

begin insert 70031. end insert   

The California State Education Access Loan Program,
which may also be referred to as the SEAL program, is hereby
established.

begin insert 70032. end insert   

As used in this article, the following terms have the
following meanings:

(a) An “academic year” is July 1 to June 30, inclusive. The
starting date of a session shall determine the academic year in
which it is included.

(b) “Award year” means one academic year, or the equivalent,
of attendance at a qualifying institution.

(c) “Commission” means the Student Aid Commission.

(d) “Cost of attendance” means the student’s tuition and fees,
books and supplies, living expenses, transportation expenses, and
any other student expenses used to calculate a student’s financial
need for purposes of federal Title IV student aid programs.

(e) “Enrollment status” means part-time status or full-time
status of a student at a qualifying institution.

(f) “Expected family contribution” means a student’s expected
family contribution calculated according to the federal
methodology pursuant to subdivision (a) of Section 69506 (as
established by Title IV of the federal Higher Education Act of 1965,
as amended (20 U.S.C. Secs. 1070 et seq.)).

(g) “Financial need” means a student’s financial need
calculated pursuant to the federal financial need methodology (as
established by Title IV of the federal Higher Education Act of 1965,
as amended (20 U.S.C. Secs. 1070 et seq.)).

(h) “Instructional program” means a program of study that
results in the award of a baccalaureate degree or undergraduate
certificate, or undergraduate coursework in a program of study
leading directly to a first professional degree for which no
baccalaureate degree or undergraduate degree is awarded.

(i) “Participating institution” means any campus of the
California State University or the University of California that
elects to participate in the SEAL program pursuant to the
requirements specified for a qualifying institution as set forth in
this article.

(j) “Satisfactory academic progress” means those criteria
required by applicable federal standards published in Title 34 of
the Code of Federal Regulations. A participating institution may
adopt regulations defining “satisfactory academic progress” in
a manner that duplicates those federal standards.

begin insert 70033. end insert   

(a) Commencing with the 2015-16 academic year, a
student attending a participating institution may receive a loan
under the SEAL program if the student satisfies all of the following
requirements:

(1) The student is exempt from paying nonresident tuition under
Section 68130.5, or meets equivalent requirements adopted by the
Regents of the University of California.

(2) The student applies for financial aid using the application
established by the California Student Aid Commission pursuant
to subdivision (b) of Section 69508.5, known as the Dream Act
Application.

(3) The student is enrolled at least half-time in good standing
in an instructional program at a participating institution.

(4) The student is determined by the participating institution to
have financial need.

(5) The student maintains satisfactory academic progress at the
participating institution.

(6) The student is not incarcerated.

(7) The student is not in default on any federal student loan,
state student loan, or student loan issued by the California State
University or the University of California.

(8) The student is enrolled in a program eligible for
participation in the Cal Grant program.

(b) (1) The Student Aid Commission or the participating
institution shall require the student to affirm in writing that he or
she satisfies the requirements of paragraph (7) of subdivision (a).

(2) A student seeking an award shall authorize the Student Aid
Commission to access any information pertinent to certify that the
student meets the requirements of subdivision (a).

(c) The Student Aid Commission, in collaboration with the
participating institution, shall certify that the student satisfies all
of the requirements specified in subdivision (a) before the
participating institution may issue an award to the student pursuant
to this article.

(d) The Legislature finds and declares that this article is a state
law within the meaning of Section 1621(d) of Title 8 of the United
States Code.

begin insert 70034. end insert   

(a) The amount of the SEAL loan offered to an
individual student by a participating institution shall be determined
by the institution, subject to the following provisions:

(1) The loan may not exceed the financial need of the student.

(2) No student may borrow more than four thousand dollars
($4,000) under this program within a single academic year.

(3) No student may borrow more than twenty thousand dollars
($20,000) in the aggregate under the program from any one
participating institution.

(b) The interest rate for loans issued under the program shall
be the same as the then-current interest rate for undergraduate
loans under the William D. Ford Federal Direct Loan Program,
plus 2 percentage points.

(c) The standard repayment term for a SEAL loan shall be 10
years. Repayment shall commence following a six-month grace
period that begins when a student graduates or ceases to maintain
at least half-time enrollment in a baccalaureate degree or
undergraduate certificate program.

(d) Interest shall not accrue on a SEAL loan during periods of
at least half-time enrollment in a baccalaureate degree or
undergraduate certificate program or during the six-month grace
period specified in subdivision (c).

(e) Eligibility for deferment or forbearance of a SEAL loan shall
be determined by the participating institution in accordance with
the standards set for in the William D. Ford Federal Direct Loan
Program.

(f) Participating institutions shall use a common promissory
note, approved by the Treasurer, to issue SEAL loans.

begin insert 70035. end insert   

(a) It is the intent of the Legislature that, each fiscal
year, funds shall be appropriated in the annual Budget Act to
participating institutions for purposes of the SEAL program.

(b) The annual Budget Act shall allocate funding to participating
institutions based on the number of eligible students attending the
institution who applied for student financial aid pursuant to Section
69508.5 the prior academic year.

(c) Each participating institution shall deposit funds
appropriated pursuant to subdivision (a) in a SEAL revolving fund
established by each institution, subject to subdivision (e). SEAL
loans shall be awarded from, and SEAL loan repayments shall be
deposited into, these revolving funds.

(d) Each participating institution shall annually contribute
discretionary funds into its SEAL revolving fund so that the
institution’s contribution of funds equals or exceeds 25 percent of
all funds in the institution’s SEAL revolving fund at the start of
each academic year before SEAL loans for that academic year are
awarded.

(e) A participating institution shall not receive any additional
state funds if the receipt of these funds would reduce the percentage
of the SEAL revolving fund derived from the institution’s
contribution of funds to less than 25 percent of all funds in the
institution’s SEAL revolving fund as described in subdivision (d).

(f) In the event that an institution terminates its participation
in the SEAL program, outstanding SEAL loans awarded by the
institution shall be assigned to the state, and the institution shall
return the funds remaining in its SEAL revolving fund except the
discretionary funds provided by the institution pursuant to
subdivision (d).

(g) The California State University and the University of
California shall annually report to the Legislature as part of their
respective annual financial aid reports the dollar amount of each
SEAL loan awarded and number of students for whom a SEAL
loan was awarded that academic year.

begin insert 70036. end insert   

Each participating institution is responsible for all the
following:

(a) The participating institution shall determine a student’s
eligibility for a SEAL loan.

(b) The participating institution shall award SEAL loan funds
to students.

(c) The participating institution shall provide entrance and exit
loan counseling to borrowers that is generally comparable to that
required by federal student loan programs.

(d) The participating institution shall service SEAL loans, collect
SEAL loan repayments, and perform all of the due diligence
required by the Fair Credit Reporting Act.

(e) The participating institution shall establish mechanisms for
recording the annual amount of the SEAL loan borrowed by each
recipient, and the aggregate amount of SEAL loans borrowed by
each recipient, in order to comply with the annual and aggregate
borrowing limits set forth in Section 70034.

begin insert 70037. end insert   

(a) Each participating institution is entitled to an
administrative cost allowance for an award year if the institution
elects to advance funds under the SEAL program to students for
that award year.

(b) The amount of the administrative cost allowance described
in subdivision (a) shall equal 5 percent of the institution’s total
amount of SEAL loan funds awarded to students for the award
year that the participating institution advances funds to students
under the SEAL program.

(c) Each participating institution may charge its administrative
cost allowance to its SEAL revolving fund.

(d) Each participating institution shall use its administrative
cost allowance to offset the cost of administering the SEAL
program.

(e) Each participating institution is responsible for
administrative costs that exceed its administrative cost allowance.

begin insert 70038. end insert   

If a state court finds that Section 70033, or any similar
provision adopted by the Regents of the University of California,
is unlawful, the court may order, as equitable relief, that the
participating institution subject to the lawsuit terminate all loans
awarded pursuant to that statute or provision deemed unlawful
by a state court, but no money damages, loans, or other retroactive
relief, may be awarded. In an action in which a state court finds
that Section 70033 or any similar provision adopted by the Regents
of the University of California, is unlawful, the California State
University and the University of California shall be immune from
the imposition of any award of money damages, loans, or other
retroactive relief.

end insert

begin delete

SECTION 1.  

It is the intent of the Legislature to enact
legislation later in the 2013-14 Regular Session to establish a
postsecondary educational loan program for students at the
University of California and the California State University who
are exempt from nonresident tuition and not eligible to participate
in federal loan programs.

end delete