Senate Bill No. 39
(By Senators Boley and Sprouse)
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[Introduced January 9, 2002; 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 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.