House Study Bill 71 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED DEPARTMENT OF EDUCATION/COLLEGE STUDENT AID COMMISSION BILL) A BILL FOR An Act relating to certain responsibilities of the college 1 student aid commission under the federal Higher Education 2 Act of 1965. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1202DP (4) 85 kh/sc

S.F. _____ H.F. _____ Section 1. Section 8A.504, subsection 1, paragraph c, 1 subparagraph (2), Code 2013, 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 2013, 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 261.37, subsection 7, Code 2013, is amended 21 to read as follows: 22 7. To establish an effective system for the collection 23 of delinquent loans, including the adoption of an agreement 24 with the department of administrative services to set off 25 against a defaulter’s income tax refund or rebate the amount 26 that is due because of a default on a guaranteed or parental 27 loan made under this division . The commission shall adopt 28 rules under chapter 17A necessary to assist the department of 29 administrative services in the implementation of the student 30 loan setoff program as established under section 8A.504 . 31 The commission shall apply administrative wage garnishment 32 procedures authorized under the federal Higher Education Act of 33 1965, as amended and codified in 20 U.S.C. § 1071 et seq., for 34 all delinquent loans, including loans authorized under section 35 -1- LSB 1202DP (4) 85 kh/sc 1/ 3

S.F. _____ H.F. _____ 261.38 , when a defaulter who is financially capable of paying 1 fails to voluntarily enter into a reasonable payment agreement. 2 In no case shall the commission garnish more than the amount 3 authorized by federal law for all loans being collected by the 4 commission, including those authorized under section 261.38 . 5 Sec. 4. Section 261.38, subsections 1, 3, and 4, Code 2013, 6 are amended to read as follows: 7 1. The commission shall establish a loan reserve account 8 and an agency operating account as authorized by the federal 9 Higher Education Act of 1965. The commission shall credit to 10 these accounts this account all moneys provided for the state 11 student loan program by the United States, the state of Iowa, 12 or any of their agencies, departments , or instrumentalities, 13 as well as any funds accruing to the program which are not 14 required for current administrative expenses. The commission 15 may expend moneys in the loan reserve and agency operating 16 accounts account as authorized by the federal Higher Education 17 Act of 1965. 18 3. Notwithstanding section 8.33 , funds on deposit in the 19 loan reserve and agency operating accounts account shall not 20 revert to the state general fund at the close of any fiscal 21 year. 22 4. The treasurer of state shall invest any funds , including 23 those in the loan reserve and agency operating accounts 24 account , and, notwithstanding section 12C.7 , the interest 25 income earned shall be credited back to the appropriate agency 26 operating account. 27 Sec. 5. Section 261.38, subsection 2, Code 2013, is amended 28 by striking the subsection. 29 Sec. 6. REPEAL. Sections 261.39 and 261.41, Code 2013, are 30 repealed. 31 EXPLANATION 32 This bill makes changes to Code chapter 261 in response to 33 recent changes in the federal Higher Education Act of 1965, as 34 amended. The bill eliminates references to guaranteed student 35 -2- LSB 1202DP (4) 85 kh/sc 2/ 3

S.F. _____ H.F. _____ or parental loans and to the loan reserve account, and repeals 1 related Code provisions. 2 -3- LSB 1202DP (4) 85 kh/sc 3/ 3