Bill Text: IA SF283 | 2017-2018 | 87th General Assembly | Introduced
Bill Title: A bill for an act relating to the administration and servicing of certain federal educational loans by certain entities and including applicability provisions.
Spectrum: Partisan Bill (Republican 10-0)
Status: (Introduced - Dead) 2017-02-22 - Subcommittee: C. Johnson, Bertrand, and McCoy. S.J. 387. [SF283 Detail]
Download: Iowa-2017-SF283-Introduced.html
Senate File 283 - Introduced SENATE FILE BY ZAUN, GUTH, CHELGREN, SEGEBART, SHIPLEY, KAPUCIAN, BERTRAND, ANDERSON, KRAAYENBRINK, and C. JOHNSON A BILL FOR 1 An Act relating to the administration and servicing of certain 2 federal educational loans by certain entities and including 3 applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 1603XS (8) 87 kh/rj PAG LIN 1 1 Section 1. Section 261F.1, Code 2017, is amended by adding 1 2 the following new subsection: 1 3 NEW SUBSECTION. 9A. "Prime rate" means the same as defined 1 4 in section 421.7, subsection 5. 1 5 Sec. 2. Section 261F.3, Code 2017, is amended by adding the 1 6 following new subsection: 1 7 NEW SUBSECTION. 6A. Federal educational loan administration. 1 8 a. A covered institution shall not administer any loan 1 9 that is made, insured, or guaranteed under Tit. IV of the 1 10 federal Higher Education Act of 1965, as amended, on behalf of 1 11 a borrower if the interest rate on the loan exceeds the prime 1 12 rate plus two percent. 1 13 b. Student loan servicers that contract with the United 1 14 States department of education, provide customer service for 1 15 federal educational loans held by other lenders, or purchase 1 16 federal educational loans from other lenders shall not operate 1 17 or conduct business in this state if the interest rate on the 1 18 federal educational loan that was obtained by a borrower who is 1 19 a resident of this state and which is administered, managed, or 1 20 serviced by the student loan servicer, exceeds the prime rate 1 21 plus two percent. 1 22 Sec. 3. APPLICABILITY. This Act applies to the 1 23 administration of a loan made, insured, or guaranteed on or 1 24 after the effective date of this Act. 1 25 EXPLANATION 1 26 The inclusion of this explanation does not constitute agreement with 1 27 the explanation's substance by the members of the general assembly. 1 28 This bill prohibits certain entities from administering 1 29 federal educational loans to borrowers, which under Code 1 30 section 261F.1 include students and their parents or persons in 1 31 parental relation to such students, if the interest rates on 1 32 those loans exceed the prime rate plus 2 percent. 1 33 The bill prohibits public and private postsecondary 1 34 institutions from administering federal educational loans to 1 35 borrowers if the interest rates on the loans exceed the prime 2 1 rate plus 2 percent. 2 2 The bill also prohibits student loan servicers that contract 2 3 with the United States department of education, provide 2 4 customer service for federal educational loans held by other 2 5 lenders, or purchase federal educational loans from other 2 6 lenders from operating in this state if the interest rate on 2 7 the federal educational loan that was obtained by a resident 2 8 borrower and which is administered, managed, or serviced by the 2 9 student loan servicer, exceeds the prime rate plus 2 percent. 2 10 Currently, the attorney general is authorized to conduct 2 11 investigations to determine whether to initiate proceedings 2 12 under Code chapter 261F. An institution in violation of the 2 13 Code chapter may be liable for civil penalties. 2 14 The term "prime rate" is defined to mean the prime rate 2 15 charged by banks on short=term business loans, as determined 2 16 by the board of governors of the federal reserve system and 2 17 published in the federal reserve bulletin. 2 18 The bill applies to loans made, insured, or guaranteed on or 2 19 after the effective date of the bill. LSB 1603XS (8) 87 kh/rj
