Senate
File
283
-
Introduced
SENATE
FILE
283
BY
ZAUN
,
GUTH
,
CHELGREN
,
SEGEBART
,
SHIPLEY
,
KAPUCIAN
,
BERTRAND
,
ANDERSON
,
KRAAYENBRINK
,
and
C.
JOHNSON
A
BILL
FOR
An
Act
relating
to
the
administration
and
servicing
of
certain
1
federal
educational
loans
by
certain
entities
and
including
2
applicability
provisions.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
4
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283
Section
1.
Section
261F.1,
Code
2017,
is
amended
by
adding
1
the
following
new
subsection:
2
NEW
SUBSECTION
.
9A.
“Prime
rate”
means
the
same
as
defined
3
in
section
421.7,
subsection
5.
4
Sec.
2.
Section
261F.3,
Code
2017,
is
amended
by
adding
the
5
following
new
subsection:
6
NEW
SUBSECTION
.
6A.
Federal
educational
loan
administration.
7
a.
A
covered
institution
shall
not
administer
any
loan
8
that
is
made,
insured,
or
guaranteed
under
Tit.
IV
of
the
9
federal
Higher
Education
Act
of
1965,
as
amended,
on
behalf
of
10
a
borrower
if
the
interest
rate
on
the
loan
exceeds
the
prime
11
rate
plus
two
percent.
12
b.
Student
loan
servicers
that
contract
with
the
United
13
States
department
of
education,
provide
customer
service
for
14
federal
educational
loans
held
by
other
lenders,
or
purchase
15
federal
educational
loans
from
other
lenders
shall
not
operate
16
or
conduct
business
in
this
state
if
the
interest
rate
on
the
17
federal
educational
loan
that
was
obtained
by
a
borrower
who
is
18
a
resident
of
this
state
and
which
is
administered,
managed,
or
19
serviced
by
the
student
loan
servicer,
exceeds
the
prime
rate
20
plus
two
percent.
21
Sec.
3.
APPLICABILITY.
This
Act
applies
to
the
22
administration
of
a
loan
made,
insured,
or
guaranteed
on
or
23
after
the
effective
date
of
this
Act.
24
EXPLANATION
25
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
26
the
explanation’s
substance
by
the
members
of
the
general
assembly.
27
This
bill
prohibits
certain
entities
from
administering
28
federal
educational
loans
to
borrowers,
which
under
Code
29
section
261F.1
include
students
and
their
parents
or
persons
in
30
parental
relation
to
such
students,
if
the
interest
rates
on
31
those
loans
exceed
the
prime
rate
plus
2
percent.
32
The
bill
prohibits
public
and
private
postsecondary
33
institutions
from
administering
federal
educational
loans
to
34
borrowers
if
the
interest
rates
on
the
loans
exceed
the
prime
35
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283
rate
plus
2
percent.
1
The
bill
also
prohibits
student
loan
servicers
that
contract
2
with
the
United
States
department
of
education,
provide
3
customer
service
for
federal
educational
loans
held
by
other
4
lenders,
or
purchase
federal
educational
loans
from
other
5
lenders
from
operating
in
this
state
if
the
interest
rate
on
6
the
federal
educational
loan
that
was
obtained
by
a
resident
7
borrower
and
which
is
administered,
managed,
or
serviced
by
the
8
student
loan
servicer,
exceeds
the
prime
rate
plus
2
percent.
9
Currently,
the
attorney
general
is
authorized
to
conduct
10
investigations
to
determine
whether
to
initiate
proceedings
11
under
Code
chapter
261F.
An
institution
in
violation
of
the
12
Code
chapter
may
be
liable
for
civil
penalties.
13
The
term
“prime
rate”
is
defined
to
mean
the
prime
rate
14
charged
by
banks
on
short-term
business
loans,
as
determined
15
by
the
board
of
governors
of
the
federal
reserve
system
and
16
published
in
the
federal
reserve
bulletin.
17
The
bill
applies
to
loans
made,
insured,
or
guaranteed
on
or
18
after
the
effective
date
of
the
bill.
19
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