BILL NUMBER: SB 1210	CHAPTERED
	BILL TEXT

	CHAPTER  754
	FILED WITH SECRETARY OF STATE  SEPTEMBER 28, 2014
	APPROVED BY GOVERNOR  SEPTEMBER 28, 2014
	PASSED THE SENATE  AUGUST 26, 2014
	PASSED THE ASSEMBLY  AUGUST 25, 2014
	AMENDED IN ASSEMBLY  AUGUST 18, 2014
	AMENDED IN ASSEMBLY  JUNE 30, 2014
	AMENDED IN SENATE  MAY 27, 2014
	AMENDED IN SENATE  APRIL 22, 2014
	AMENDED IN SENATE  MARCH 24, 2014

INTRODUCED BY   Senator Lara
   (Coauthors: Senators Correa, De León, and Steinberg)

                        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, Lara. Postsecondary education: California DREAM 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 DREAM 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 DREAM loan, 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 DREAM revolving fund established by each
campus, subject to specified exceptions. The bill would require each
participating campus to contribute its discretionary funds into its
DREAM revolving fund so that the sum of the campus' contribution of
funds and its share of DREAM loan repayments equals or exceeds 50%,
as specified, of all funds in the campus' DREAM revolving fund at the
start of each academic year before DREAM 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 DREAM loan awarded and number of students for whom a
DREAM loan was awarded that academic year, and require each
participating campus to annually report the total amount of funding
in the institution's DREAM revolving fund, the annual amount
contributed by the state, and the annual amount contributed by the
institution to the institution's DREAM revolving fund, and the annual
administrative costs of the DREAM Program at the institution.
   The bill would require a participating campus to determine a
student's eligibility for a DREAM loan, award DREAM loans to
students, and establish mechanisms for recording the annual amount of
the DREAM loan borrowed by each recipient, and the aggregate amount
of DREAM loans borrowed by each recipient.
   The bill would require the trustees and request the regents to
adopt regulations providing for the withholding of institutional
services from current and former students who have been notified in
writing that they are in default on DREAM loans.
   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 DREAM 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 PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  This act shall be known, and may be cited, as the
California DREAM 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 DREAM Loan 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 DREAM Loan 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 DREAM Loan Program


   70030.  This article shall be known, and may be cited, as the
California DREAM Loan Program.
   70031.  The California DREAM Loan Program, which may also be
referred to as the DREAM 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 start
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. Sec. 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. Sec. 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 DREAM 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
DREAM 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 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 DREAM 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.
   (c) The standard repayment term for a DREAM 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 degree or certificate program.
   (d) Interest shall not accrue on a DREAM loan during periods of at
least half-time enrollment in a degree or certificate program or
during the six-month grace period specified in subdivision (c).
   (e) Eligibility for deferment or forbearance of a DREAM loan shall
be determined by the participating institution in accordance with
the standards set forth in the William D. Ford Federal Direct Loan
Program.
   (f) Participating institutions shall use a common promissory note,
approved by the Treasurer, to issue DREAM 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 DREAM 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) (1) Each participating institution shall deposit funds
appropriated pursuant to subdivision (a) in a DREAM revolving fund
established by each institution, subject to subdivision (e). DREAM
loans shall be awarded from, and DREAM loan repayments shall be
deposited into, these revolving funds.
   (2) In accordance with subdivision (d), participating institutions
shall make DREAM loan repayment revenue available to offset state
and institutional contributions to the DREAM loan program so that, as
much as practicable, the respective annual costs to the state and to
participating institutions shall be reduced equally.
   (d) At the start of each academic year, before DREAM loans for
that academic year are awarded, each participating institution shall
contribute discretionary funds into its DREAM revolving fund so that
the sum of the institution's contribution of funds and the
institution's share of DREAM loan repayments equals or exceeds 50
percent of all funds in the institution's DREAM revolving fund for
each year of an institution's participation.
   (e) A participating institution shall not receive any additional
state funds if the receipt of these funds would reduce the percentage
of the DREAM revolving fund derived from the sum of the institution'
s contribution of funds and DREAM loan repayments to less than the
specified percentage of all funds in the institution's DREAM
revolving fund as described in subdivision (d).
   (f) (1) In the event that an institution terminates its
participation in the DREAM Program, the institution shall continue to
service DREAM loans, collect DREAM loan repayments, and perform all
due diligence required by the federal Fair Credit Reporting Act (15
U.S.C. Sec. 1681 et seq.) until the last students at that institution
issued loans under the DREAM Program prior to the institution
terminating its participation have repaid their loans.
   (2) An institution described in paragraph (1) that terminates its
participation in the DREAM Program shall annually repay all funds
provided by the state as the institution collects DREAM loan
repayments.
   (g) (1) 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
DREAM loan awarded and number of students for whom a DREAM loan was
awarded that academic year.
   (2) Each institution, including an institution described in
subdivision (f), shall annually report all of the following:
   (A) The total amount of funding in the institution's DREAM
revolving fund.
   (B) The annual amount contributed by the state to the institution'
s DREAM revolving fund.
   (C) The annual amount contributed by the institution to the
institution's DREAM revolving fund.
   (D) The annual administrative costs of the DREAM Program at the
institution.
   70036.  Each participating institution is responsible for all the
following:
   (a) The participating institution shall determine a student's
eligibility for a DREAM loan.
   (b) The participating institution shall award DREAM 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 DREAM loans,
collect DREAM loan repayments, and perform all of the due diligence
required by the federal Fair Credit Reporting Act (15 U.S.C. Sec.
1681 et seq.).
   (e) The participating institution shall establish mechanisms for
recording the annual amount of the DREAM loan borrowed by each
recipient, and the aggregate amount of DREAM loans borrowed by each
recipient, in order to comply with the annual and aggregate borrowing
limits set forth in Section 70034.
   70037.  (a) The Trustees of the California State University and
the Regents of the University of California shall adopt regulations
providing for the withholding of institutional services from students
or former students who have been notified in writing at the student'
s or former student's last known address that he or she is in default
on a loan or loans under the DREAM Program.
   (b) (1) The regulations adopted pursuant to subdivision (a) shall
provide that the services withheld may be provided during a period
when the facts are in dispute or when the student or former student
demonstrates to either the Trustees of the California State
University or the Regents of the University of California, as
applicable, that reasonable progress has been made to repay the loan
or that there exists a reasonable justification for the delay as
determined by the institution. The regulations shall specify the
services to be withheld from the student, which may include, but are
not limited to, the following:
   (A) The provision of grades.
   (B) The provision of transcripts.
   (C) The provision of diplomas.
   (2) The services withheld pursuant to paragraph (1) shall not
include the withholding of registration privileges.
   (c) "Default," for purposes of this section, means the failure of
a borrower to make an installment payment when due, or to meet other
terms of the promissory note under circumstances where the
institution holding the loan finds it reasonable to conclude that the
borrower no longer intends to honor the obligation to repay,
provided that this failure persists for 180 days for a loan repayable
in monthly installments, or 240 days for a loan repayable in less
frequent installments.
   (d) This section shall not impose any requirement upon the
University of California unless the Regents of the University of
California, by resolution, makes this section applicable.
   70038.  (a) Each participating institution is entitled to an
administrative cost allowance for an award year if the institution
elects to advance funds under the DREAM 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 DREAM loan funds awarded to students for the award year
that the participating institution advances funds to students under
the DREAM Program.
   (c) Each participating institution may charge its administrative
cost allowance to its DREAM revolving fund.
   (d) Each participating institution shall use its administrative
cost allowance to offset the cost of administering the DREAM Program.

   (e) Each participating institution is responsible for
administrative costs that exceed its administrative cost allowance.
   70039.  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.