House File 2069 



                                       HOUSE 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, and
  1  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