House File 2069HOUSE FILE BY SMITH Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to the maximum finance charge allowed and to 2 terms and conditions for consumer loans made for postsecondary 3 education purposes and making penalties applicable. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5104HH 82 6 kh/rj/8 PAG LIN 1 1 Section 1. Section 537.2401, subsection 1, Code Supplement 1 2 2007, is amended to read as follows: 1 3 1. Except as provided with respect to a finance charge for 1 4 loans pursuant to open=end credit under section 537.2402, and1 5 loans secured by a certificate of title of a motor vehicle 1 6 under section 537.2403, and consumer loans for postsecondary 1 7 education purposes under section 573.2404, a lender may 1 8 contract for and receive a finance charge not exceeding the 1 9 maximum charge permitted by the laws of this state or of the 1 10 United States for similar lenders, and, in addition, with 1 11 respect to a consumer loan, a supervised financial 1 12 organization or a mortgage lender may contract for and receive 1 13 a finance charge, calculated according to the actuarial 1 14 method, not exceeding twenty=one percent per year on the 1 15 unpaid balance of the amount financed. Except as provided in 1 16 section 537.2403, this subsection does not prohibit a lender 1 17 from contracting for and receiving a finance charge exceeding 1 18 twenty=one percent per year on the unpaid balance of the 1 19 amount financed on consumer loans if authorized by other 1 20 provisions of the law. 1 21 Sec. 2. NEW SECTION. 537.2404 FINANCE CHARGE FOR 1 22 CONSUMER LOANS FOR POSTSECONDARY EDUCATION. 1 23 1. In making a consumer loan to an individual who is a 1 24 student or the parent or guardian of a student for purposes of 1 25 financing a postsecondary education, a creditor shall not 1 26 impose finance charges or other terms or conditions more 1 27 onerous than those extended contemporaneously to students, 1 28 parents, or guardians, as applicable, under the federally 1 29 guaranteed higher education loan programs administered by the 1 30 college student aid commission. 1 31 2. A consumer who is charged a finance charge in excess of 1 32 the limitation in this section may seek any remedies available 1 33 under section 537.5201 for an excess charge. 1 34 3. Notwithstanding section 537.1301, subsection 15, 1 35 paragraph "a", subparagraph (5), for purposes of this section, 2 1 a consumer loan includes a consumer loan in which the amount 2 2 financed is of any amount. 2 3 EXPLANATION 2 4 This bill amends the Iowa consumer credit code to provide 2 5 that creditors who make consumer loans, including supervised 2 6 loans, to students or parents or guardians of students for 2 7 postsecondary education purposes cannot impose finance charges 2 8 or other terms or conditions more onerous than those extended 2 9 to students or parents or guardians under the federally 2 10 guaranteed higher education loan programs administered by the 2 11 college student aid commission. 2 12 Consumer loans regulated under the Code are limited to 2 13 loans of not more than $25,000. The bill exempts loans made 2 14 to students, parents, or guardians for postsecondary education 2 15 purposes from this limitation, making the bill's provisions 2 16 applicable to such loans of any amount. 2 17 Under Code section 537.5201(3), a consumer is not obligated 2 18 to pay an excess charge and is entitled to a refund of any 2 19 excess charge paid. If a consumer entitled to a refund is 2 20 refused the refund, the consumer may recover from the creditor 2 21 or other person liable in a civil action the excess charge and 2 22 a penalty of not less than $100 or more than $1,000. 2 23 LSB 5104HH 82 2 24 kh/rj/8