S.F. _____ H.F. _____ Section 1. Section 261.36, Code 2011, is amended to read as 1 follows: 2 261.36 Powers and duties of commission . 3 1. The commission shall have necessary powers to carry out 4 its purposes and duties under this division , including but not 5 limited to the power to do the following : 6 1. a. Sue and be sued in its own name. 7 2. b. Incur and discharge debts including the payment of 8 any defaulted loan obligations which have been guaranteed by 9 the commission. 10 3. c. Make and execute agreements, contracts , and other 11 instruments with any public or private person or agency 12 including the United States secretary of education. The 13 commission shall also have the power to enter into any 14 agreements with the United States secretary of education or 15 other federal agency as are necessary to provide programs and 16 services administered pursuant to this chapter to current and 17 future Iowa postsecondary students, to the students’ school 18 counselors, parents, and guardians, and to the elementary, 19 secondary, and postsecondary institutions the students attend. 20 4. d. Guarantee loans made by eligible lenders to eligible 21 borrowers who are, or whose children are, enrolled or will 22 be enrolled at eligible institutions as at least half-time 23 students as defined by the commission. 24 5. e. Approve educational institutions as eligible 25 institutions upon their meeting if and when the institutions 26 meet the requirements established by the commission. 27 6. f. Approve financial or credit institutions, insurance 28 companies , or other lenders as eligible lenders upon 29 their meeting if and when such entities meet the standards 30 established by the commission for making guaranteed loans. 31 7. g. Accept appropriations, gifts, grants, loans or other 32 aid from public or private persons or agencies including the 33 United States secretary of education. 34 8. h. Implement various means of encouraging maximum lender 35 -1- LSB 1205DP (7) 84 kh/sc 1/ 6

S.F. _____ H.F. _____ participation in the Iowa guaranteed loan program. 1 i. Administer the college access initiative authorized by 20 2 U.S.C. § 1092e, or its successor program. 3 j. Administer the gaining early awareness and readiness for 4 undergraduate programs initiative authorized by 20 U.S.C. § 5 1070a – 21 through 1070a – 28, or its successor program. 6 2. The duties of the commission under this division shall 7 be as follows: 8 a. To review the Iowa guaranteed loan program. 9 b. To review and make disposition of all applications for 10 the guarantee of student loans. 11 c. Collect an insurance premium of not more than the amount 12 authorized by the Higher Education Act of 1965. The premium 13 shall be collected by the lender upon the disbursement of the 14 loan and shall be remitted promptly to the commission. 15 d. To enter into any agreements with the United States 16 secretary of education necessary for purposes of receiving full 17 benefit of the state program incentives offered pursuant to the 18 Higher Education Act of 1965. 19 e. To adopt rules pursuant to chapter 17A to implement the 20 provisions of this division, including establishing standards 21 for educational institutions, lenders, and individuals to 22 become eligible institutions, eligible lenders, and eligible 23 borrowers. Notwithstanding any contrary provisions in chapter 24 537, the rules and standards established shall be consistent 25 with the requirements provided in the Higher Education Act of 26 1965. The commission shall expend all property and moneys 27 belonging to the agency operating account to execute the 28 commission’s powers and duties under this chapter. 29 f. To reimburse eligible lenders for the amount authorized 30 by the Higher Education Act of 1965 on defaulted loans 31 guaranteed by the commission upon receipt of written notice 32 of the default accompanied by evidence that the lender has 33 exercised the required degree of diligence in efforts to 34 collect the loan. 35 -2- LSB 1205DP (7) 84 kh/sc 2/ 6

S.F. _____ H.F. _____ g. To establish an effective system for the collection of 1 delinquent loans, including the adoption of an agreement with 2 the department of administrative services to set off against 3 a defaulter’s income tax refund or rebate the amount that is 4 due because of a default on a guaranteed student or parental 5 loan made under this division. The commission shall adopt 6 rules under chapter 17A necessary to assist the department of 7 administrative services in the implementation of the student 8 loan setoff program as established under section 8A.504. 9 The commission shall apply administrative wage garnishment 10 procedures authorized under the Higher Education Act of 1965 11 for all delinquent loans, including loans authorized under 12 section 261.38, when a defaulter who is financially capable of 13 paying fails to voluntarily enter into a reasonable payment 14 agreement. In no case shall the commission garnish more than 15 the amount authorized by federal law for all loans being 16 collected by the commission, including those authorized under 17 section 261.38. 18 h. To develop and provide information, forms, publications, 19 internet-based resources, and other educational services to 20 eligible lenders, postsecondary institutions, elementary 21 and secondary schools, students, parents, education loan 22 borrowers, and the general public. The commission, as it deems 23 necessary, shall provide applicants with information about the 24 past default rates of borrowers, enrollment, and placement 25 statistics by postsecondary institutions. 26 i. To develop all forms necessary to the proper 27 administration of the guaranteed student loan program. 28 j. To report annually to the governor and the general 29 assembly on the status of the guaranteed student loan program. 30 k. To implement all possible assistance to eligible 31 lenders for the purpose of easing the workload entailed in 32 participation in the guaranteed student loan program. 33 l. To develop and implement programs and other initiatives 34 or services necessary to perform duties that include but 35 -3- LSB 1205DP (7) 84 kh/sc 3/ 6

S.F. _____ H.F. _____ are not limited to postsecondary student aid outreach, 1 financial literacy education, career planning, postsecondary 2 student aid program compliance assistance and training, 3 postsecondary student aid program monitoring and compliance 4 review of eligible lenders and eligible institutions, default 5 prevention, default aversion, and defaulted federal student 6 loan collection. 7 m. To conduct college access initiative activities as 8 required by 20 U.S.C. § 1092e, including but not limited to 9 providing publications, programs, training, and internet-based 10 resources for the public relating to college planning, career 11 preparation, and paying for college. 12 n. To develop and implement all policies and procedures 13 necessary to the proper administration of the guaranteed 14 student loan program and any other program or activity related 15 to postsecondary financial aid that the commission administers 16 or conducts. 17 Sec. 2. Section 261.38, subsections 1 and 2, Code 2011, are 18 amended to read as follows: 19 1. The commission shall establish a loan reserve account and 20 an agency operating account as authorized by the federal Higher 21 Education Act of 1965. The commission shall credit to these 22 accounts all moneys provided for the state student guaranteed 23 loan program by the United States, the state of Iowa, or any of 24 their agencies, departments , or instrumentalities, as well as 25 any funds accruing to the program which are not required for 26 current administrative expenses. The commission may expend 27 moneys in the loan reserve and agency operating accounts as 28 authorized by the federal Higher Education Act of 1965. The 29 commission shall expend all property and moneys belonging to 30 the agency operating account to execute the commission’s powers 31 and duties under this chapter. 32 2. The payment of any funds for the default on a guaranteed 33 student loan shall be solely from the loan reserve and agency 34 operating accounts account . The general assembly shall not be 35 -4- LSB 1205DP (7) 84 kh/sc 4/ 6

S.F. _____ H.F. _____ obligated to appropriate any moneys to pay for any defaults or 1 to appropriate any moneys to be credited to the loan reserve 2 account. The commission shall not give or lend the credit of 3 the state of Iowa. 4 Sec. 3. Section 261.39, unnumbered paragraph 1, Code 2011, 5 is amended by striking the unnumbered paragraph. 6 Sec. 4. Section 261.41, Code 2011, is amended to read as 7 follows: 8 261.41 Account dissolved —— balance to general fund. 9 1. The loan program and the loan reserve account established 10 by this division shall not be dissolved until all either of the 11 following applies: 12 a. All guaranteed loans have been repaid by the borrower or, 13 if in default, by the commission. 14 b. The commission is directed by the United States secretary 15 of education to dispose of the program and account. 16 2. Upon dissolution of the loan program, all the property 17 and moneys of the program and in belonging to the loan reserve 18 account not owed to the federal government shall be transferred 19 to the state general fund are the property of the United States 20 secretary of education under 20 U.S.C. § 1072(a)(3) . 21 Sec. 5. REPEAL. Section 261.37, Code 2011, is repealed. 22 EXPLANATION 23 This bill amends the Code division that provides for the 24 guaranteed loan program administered by the college student 25 aid commission. The bill modifies the commission’s powers 26 and duties in response to recent changes made in the federal 27 government’s student financial aid initiatives. 28 The bill authorizes the commission to enter into any 29 agreements with the United States secretary of education or 30 other federal agency that are necessary to provide education 31 programs and services to current and future Iowa postsecondary 32 students and their counselors, parents and guardians, and to 33 elementary, secondary, and postsecondary institutions. The 34 bill also specifically authorizes the commission to administer 35 -5- LSB 1205DP (7) 84 kh/sc 5/ 6

S.F. _____ H.F. _____ the college access initiative and the gaining early awareness 1 and readiness for undergraduate programs authorized under 2 federal law. 3 The bill requires the commission to develop and provide 4 information, materials, and services to eligible lenders, 5 postsecondary institutions, elementary and secondary schools, 6 students, parents, education loan borrowers, and the general 7 public; to develop and implement programs, initiatives and 8 services relating to postsecondary student aid outreach, 9 financial literacy education, career planning, student aid 10 program compliance assistance and training, program monitoring 11 and compliance review, default prevention, default aversion, 12 and defaulted federal student loan collection; and to conduct 13 college access initiative activities as required under federal 14 law. 15 The bill modifies and transfers the language of Code section 16 261.37, relating to the duties of the commission to Code 17 section 261.36, relating to the powers of the commission. The 18 bill specifies that the payment of funds for the default on a 19 guaranteed student loan shall be solely from the commission’s 20 loan reserve account and eliminates the option of paying the 21 funds from the agency operating account. 22 The bill requires the commission to expend property and 23 moneys belonging to the agency operating account to execute the 24 commission’s powers and duties. 25 Currently, the student loan program and the loan reserve 26 account can only be dissolved if all guaranteed loans have been 27 repaid by the borrower or, if in default, by the commission. 28 The bill adds that the program and the account may also be 29 dissolved if the United States secretary of education directs 30 the commission to dispose of the program and account. Upon 31 dissolution, the bill states that the property and moneys 32 belonging to the loan reserve account are the property of the 33 United States secretary of education. 34 -6- LSB 1205DP (7) 84 kh/sc 6/ 6