House Study Bill 557 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED COLLEGE STUDENT AID COMMISSION BILL) A BILL FOR An Act relating to programs and accounts administered by the 1 college student aid commission. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 5165XD (5) 85 kh/rj

S.F. _____ H.F. _____ Section 1. Section 8A.504, subsection 1, paragraph c, 1 subparagraph (2), Code 2014, is amended to read as follows: 2 (2) An amount that is due because of a default on a 3 guaranteed student or parental loan under chapter 261 . 4 Sec. 2. Section 8A.504, subsection 4, Code 2014, is amended 5 to read as follows: 6 4. The director shall have the authority to enter into 7 reciprocal agreements with the departments of revenue of other 8 states that have enacted legislation that is substantially 9 equivalent to the setoff procedure provided in this section 10 for the recovery of an amount due because of a default on a 11 guaranteed student or parental loan under chapter 261 . A 12 reciprocal agreement shall also be approved by the college 13 student aid commission. The agreement shall authorize the 14 department to provide by rule for the setoff of state income 15 tax refunds or rebates of defaulters from states with which 16 Iowa has a reciprocal agreement and to provide for sending 17 lists of names of Iowa defaulters to the states with which Iowa 18 has a reciprocal agreement for setoff of that state’s income 19 tax refunds. 20 Sec. 3. Section 261.9, unnumbered paragraph 1, Code 2014, 21 is amended to read as follows: 22 When used in this division part , unless the context 23 otherwise requires: 24 Sec. 4. Section 261.37, subsection 7, Code 2014, is amended 25 to read as follows: 26 7. To establish an effective system for the collection 27 of delinquent loans, including the adoption of an agreement 28 with the department of administrative services to set off 29 against a defaulter’s income tax refund or rebate the amount 30 that is due because of a default on a guaranteed or parental 31 loan made under this division . The commission shall adopt 32 rules under chapter 17A necessary to assist the department of 33 administrative services in the implementation of the student 34 loan setoff program as established under section 8A.504 . 35 -1- LSB 5165XD (5) 85 kh/rj 1/ 3

S.F. _____ H.F. _____ The commission shall apply administrative wage garnishment 1 procedures authorized under the federal Higher Education Act of 2 1965, as amended and codified in 20 U.S.C. § 1071 et seq., for 3 all delinquent loans, including loans authorized under section 4 261.38 , when a defaulter who is financially capable of paying 5 fails to voluntarily enter into a reasonable payment agreement. 6 In no case shall the commission garnish more than the amount 7 authorized by federal law for all loans being collected by the 8 commission, including those authorized under section 261.38 . 9 Sec. 5. Section 261.38, subsections 1, 3, and 4, Code 2014, 10 are amended to read as follows: 11 1. The commission shall establish a loan reserve account 12 and an agency operating account as authorized by the federal 13 Higher Education Act of 1965. The commission shall credit to 14 these accounts the agency operating account all moneys provided 15 for the state student loan program by the United States, the 16 state of Iowa, or any of their agencies, departments , or 17 instrumentalities, as well as any funds accruing to the program 18 which are not required for current administrative expenses. 19 The commission may expend moneys in the loan reserve and agency 20 operating accounts account as authorized by the federal Higher 21 Education Act of 1965. 22 3. Notwithstanding section 8.33 , funds on deposit in the 23 loan reserve and agency operating accounts account shall not 24 revert to the state general fund at the close of any fiscal 25 year. 26 4. The treasurer of state shall invest any funds , including 27 those in the loan reserve and agency operating accounts 28 account , and, notwithstanding section 12C.7 , the interest 29 income earned shall be credited back to the appropriate agency 30 operating account. 31 Sec. 6. Section 261.38, subsection 2, Code 2014, is amended 32 by striking the subsection. 33 Sec. 7. REPEAL. Sections 261.17A, 261.22, 261.39, 261.41, 34 261.44, 261.48, 261.54, 261.81A, and 261.82, Code 2013, are 35 -2- LSB 5165XD (5) 85 kh/rj 2/ 3

S.F. _____ H.F. _____ repealed. 1 Sec. 8. CODE EDITOR DIRECTIVES. 2 1. The Code editor shall do all of the following: 3 a. Create three new parts in chapter 261 as follows: 4 (1) Part 1 shall be entitled “Iowa Tuition Grants” and shall 5 include sections 261.9 through 261.16. 6 (2) Part 2 shall be entitled “Vocational-Technical Tuition 7 Grants” and shall include section 261.17. 8 (3) Part 3 shall be entitled “Administration” and shall 9 include sections 261.20 and 261.25. 10 b. (1) Transfer and renumber sections 261.18, 261.19, 11 261.23, and 261.24 as follows: 12 (a) Section 261.18 as section 261.61. 13 (b) Section 261.19 as section 261.115. 14 (c) Section 261.23 as section 261.116. 15 (d) Section 261.24 as section 261.62. 16 (2) Correct internal references as necessary. 17 2. The Code editor may renumber sections within division 18 II of chapter 261 and shall correct internal references as 19 necessary. 20 EXPLANATION 21 The inclusion of this explanation does not constitute agreement with 22 the explanation’s substance by the members of the general assembly. 23 This bill makes changes to Code chapter 261 in response to 24 recent changes in the federal Higher Education Act of 1965, 25 as amended. The bill eliminates references to guaranteed 26 student or parental loans and to the loan reserve account, and 27 repeals related Code provisions. The bill also repeals Code 28 sections relating to the Iowa hope loan program, accelerated 29 career education grant program, guaranteed loan payment 30 program, minority teacher loan payments, repayment of science 31 and mathematics loans, the Iowa heritage corps, and other 32 obsolete Code sections, and directs the Code editor to transfer 33 Code sections 261.18, 261.19, 261.23, and 261.24 to new Code 34 sections within the Code chapter to improve readability. 35 -3- LSB 5165XD (5) 85 kh/rj 3/ 3