HF 2241 (LSB 5406HV (2) 91)

HOUSE FILE 2241

BY  COMMITTEE ON HIGHER EDUCATION

(SUCCESSOR TO HSB 540)

A BILL FOR

An Act providing for partial liability of regents institutions for defaulted educational loans.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  262C.1  Definitions.
   As used in this chapter, unless the context otherwise requires:
   1.  “Borrower” means the same as defined in section 261F.1.
   2.  “Educational loan” means an educational loan, as defined in section 261F.1, for which a loan agreement is entered into on or after July 1, 2026.
   3.  “Institution” means an institution of higher education governed by the state board of regents.
    Sec. 2.  NEW SECTION.  262C.2  Default on educational loan —— liability of institution.
   If a borrower defaults on an educational loan obtained to pay for or finance the higher education expenses of a student incurred during the student’s enrollment at an institution, the institution shall be liable for ten percent of the amount owed by the borrower as a result of the default. The institution’s liability shall offset ten percent of the borrower’s liability for the default. The institution’s liability shall be governed by the same terms as the borrower unless otherwise negotiated by the institution.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to borrowers of educational loans, as those terms as defined under current law.
   The bill provides that if a borrower defaults on an educational loan obtained to pay for or finance the higher education expenses of a student incurred during the student’s enrollment at an institution of higher education governed by the state board of regents, the institution shall be liable for 10 percent of the amount owed by the borrower as a result of the default. The institution’s liability shall offset 10 percent of the borrower’s liability for the default. The institution’s liability shall be governed by the same terms as the borrower unless otherwise negotiated by the institution.