BILL NUMBER: SB 1210	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MARCH 24, 2014

INTRODUCED BY   Senator Lara

                        FEBRUARY 20, 2014

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


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1210, as amended, Lara.  Postsecondary educational loan
program.   Postsecondary education: California Student
Education Access Loan Program.  
   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.  
   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.  
   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.  
   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.  
   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.  
   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.  
   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.
 
   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. 
   Vote: majority. Appropriation: no. Fiscal committee:  no
  yes  . State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    This act shall be known, and may be
cited, as the California State Education Access Loan Act. 
   SEC. 2.    The Legislature finds and declares all of
the following:  
   (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.  
   (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.  
   (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.  
   (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. 
   SEC. 3.    Article 23 (commencing with Section 70030)
is added to Chapter 2 of Part 42 of Division 5 of Title 3 of the
  Education Code  , to read:  

      Article 23.  California Student Education Access Loan Program


   70030.  This article shall be known, and may be cited, as the
California Student Education Access Loan Program.
   70031.  The California State Education Access Loan Program, which
may also be referred to as the SEAL program, is hereby established.
   70032.  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.
   70033.  (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.
   70034.  (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.
   70035.  (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.
   70036.  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.
   70037.  (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.
   70038.  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.  
  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.