HSB 95 (LSB 1239DP (6) 87)

SENATE/HOUSE FILE _____

BY  (PROPOSED COLLEGE STUDENT AID COMMISSION BILL)

A BILL FOR

An Act relating to the disposition or modification of uncollectible student debt owed to the college student aid commission.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 261.2, Code 2017, is amended by adding the following new subsection:
   NEW SUBSECTION.  13.  Adopt rules pursuant to chapter 17A establishing standards for the disposition or modification of uncollectible student debt owed to the commission, including but not limited to the restructuring of troubled debt, settlement of debt for an amount less than the amount of debt owed, selling of debt to a third-party debt collector, and charging off uncollectible debt. The commission shall not charge off a debt under this subsection until the commission does all of the following:
   a.  Attempts to collect the debt for not less than five years after the student defaulted on an obligation owed to or collected by the commission.
   b.  Determines, in its discretion, either that no person liable for the debt has the present or prospective ability to pay the debt or that the cost of collecting the debt is likely to exceed the amount recoverable.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill directs the college student aid commission to adopt administrative rules establishing standards for the disposition or modification of uncollectible student debt owed to the commission, including but not limited to the restructuring of troubled debt, settlement of debt for an amount less than the amount of debt owed, selling of debt to a third-party debt collector, and charging off uncollectible debt.
   The commission is prohibited from charging off debt until it has attempted to collect the debt for at least five years after the student defaulted on the obligation and until after, in its discretion, the commission determines either that no person liable for the debt has the present or prospective ability to pay the debt or that the cost of collecting the debt is likely to exceed the amount recoverable.