S-1534

AN ACT Relating to the state financial aid program; amending RCW 28B.10.808, 28B.10.821, 28B.101.005, 28B.101.010, 28B.101.020, 28B.101.030, and 28B.101.040; adding a new section to chapter 28B.10 RCW; creating a new section; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 28B.10.808 and 1989 c 254 s 4 are each amended to read as follows:

In awarding grants or loans, the ((~~commission~~)) board shall proceed substantially as follows: PROVIDED, That nothing contained herein shall be construed to prevent the ((~~commission~~)) board, in the exercise of its sound discretion, from following another procedure when the best interest of the program so dictates:

(1) The ((~~commission~~)) board shall annually select the financial aid award winners from among Washington residents applying for student financial aid who have been ranked according to financial need as determined by the amount of the family contribution and other considerations brought to the ((~~commission's~~)) board's attention.

(2) Until July 1, 1993, the financial need of the highest ranked students shall be met by grants depending upon the evaluation of financial need until the total allocation has been disbursed. Funds from grants which are declined, forfeited or otherwise unused shall be reawarded until dispersed. After July 1, 1993, all state-appropriated funds for the state financial aid program, other than those dedicated to the college work-study program established by chapter 28B.12 RCW and scholarship programs under chapters 28B.102, 28B.104, 28B.107, and 28B.108 RCW, shall be utilized in the state educational loan program established in section 3 of this act.

(3) A grant may be renewed until the course of study is completed or until July 1, 1993, whichever occurs first, but not for more than an additional four academic years beyond the first year of the award. These shall not be required to be consecutive years. Qualifications for renewal will include maintaining satisfactory academic standing toward completion of the course of study, and continued eligibility as determined by the ((~~commission~~)) board. Should the recipient terminate his or her enrollment for any reason during the academic year, the unused portion of the grant shall be returned to the state educational ((~~grant~~)) loan fund by the institution according to the institution's own policy for issuing refunds.

(4) In computing financial need the ((~~commission~~)) board shall determine a maximum student expense budget allowance, not to exceed an amount equal to the total maximum student expense budget at the public institutions plus the current average state appropriation per student for operating expense in the public institutions.

(5) Beginning July 1, 1993, the board may no longer offer grants to students through the state need grant program. The state need grant program shall cease and be replaced by the state educational loan program established in section 3 of this act.

Sec. 2. RCW 28B.10.821 and 1985 c 57 s 10 are each amended to read as follows:

The state educational ((~~grant~~)) loan account is hereby established in the state treasury. The ((~~commission~~)) board shall deposit any refunds ((~~and recoveries~~)) or returns of unused portions of student financial aid funds ((~~expended in prior biennia~~)) in such account. Expenditures from such account shall be for ((~~financial aid~~)) guaranteed student loans to needy or disadvantaged students pursuant to section 3 of this act. All earnings of investments of balances in the state educational ((~~grant~~)) loan account shall be credited to the general fund.

NEW SECTION. Sec. 3. A new section is added to chapter 28B.10 RCW to read as follows:

(1) All state-appropriated funds for the state financial aid program, other than those for the college work-study program established under chapter 28B.12 RCW and scholarship programs under chapters 28B.102, 28B.104, 28B.107, and 28B.108 RCW, shall be utilized for the state educational loan program. Such appropriated funds shall be deposited in the state educational loan account established in RCW 28B.10.821. Moneys in the loan account shall be used to make guaranteed loans to needy or disadvantaged students, as defined in RCW 28B.10.802 (3) and (4).

(2) The amount of the loans made under subsection (1) of this section shall not exceed the demonstrated financial need of the student. The board shall establish loan terms and conditions that are consistent with the terms of the guaranteed loan program established by 20 U.S. Code Sec. 1701 et seq., as now or hereafter amended. All loans made shall be guaranteed by the Washington student loan guaranty association or its successor agency. The board is hereby granted full authority to operate as an eligible lender under the guaranteed loan program.

(3) Before approving a guaranteed loan, the board shall analyze the ability of the student to repay the loan based on factors which include, but are not limited to, the student's accumulated total education loan burdens. The board shall direct institutions of higher education to counsel students on the advisability of acquiring additional debt, and on the availability of other forms of financial aid.

(4) The board is responsible for collection of loans made under subsection (1) of this section and shall exercise due diligence in such collection, maintaining all necessary records to ensure that maximum repayments are made. The board shall cooperate with other lenders and the Washington student loan guaranty association, or its successor agency, in the coordinated collection of guaranteed loans and shall assure that the loans continue to meet guarantee requirements. Collection and servicing of loans under subsection (1) of this section shall be performed by entities approved for such servicing by the Washington student loan guaranty association or its successor agency. The board is permitted to perform such servicing if specifically recognized to do so by the Washington student loan guaranty association or its successor agency.

(5) Receipts from payment of interest or principal or any other subsidies to which the board as lender is entitled, which are paid by or on behalf of borrowers of funds under subsection (1) of this section, shall be deposited in the state general fund.

(6) The board shall maintain accurate records of the costs of making the loans under subsection (1) of this section, including the costs of recordkeeping and making collections under subsection (4) of this section. The board shall endeavor to keep such costs as low as is feasible and shall report such costs on an annual basis to the office of financial management.

(7) Lending activities under this section shall make maximum use of secondary markets in the support of loan consolidation. No loans may be made to any student who is known by the board or by an institution of higher education to be in default or delinquent in the payment of an outstanding student loan.

(8) The board shall adopt necessary rules and regulations to implement this section. The institutions of higher education shall cooperate fully with the board in fulfilling the provisions of this section and in providing an efficient transition between the state need grant program and the state educational loan program.

Sec. 4. RCW 28B.101.005 and 1990 c 288 s 2 are each amended to read as follows:

The legislature finds that many individuals in the state of Washington have attended college and received an associate of arts degree, or its equivalent, but are placebound.

The legislature intends to establish an educational opportunity ((~~grant~~)) loan program for placebound students who have completed an associate of arts degree, or its equivalent, in an effort to increase their participation in and completion of upper-division programs.

Sec. 5. RCW 28B.101.010 and 1990 c 288 s 3 are each amended to read as follows:

The educational opportunity ((~~grant~~)) loan program is hereby created as a demonstration project to serve placebound financially needy students by assisting them to obtain a baccalaureate degree at public and private institutions of higher education which have the capacity to accommodate such students within existing educational programs and facilities.

Sec. 6. RCW 28B.101.020 and 1990 c 288 s 4 are each amended to read as follows:

(1) For the purposes of this chapter, "placebound" means unable to relocate to complete a college program because of family or employment commitments, health concerns, monetary inability, or other similar factors.

(2) To be eligible for an educational opportunity ((~~grant~~)) loan, applicants must be placebound residents of the state of Washington who are needy students as defined in RCW 28B.10.802(3) and who have completed the associate of arts degree or its equivalent. A placebound resident is one who may be influenced by the receipt of an enhanced student financial aid award to attend an institution that has existing unused capacity rather than attend a branch campus established pursuant to chapter 28B.45 RCW. An eligible placebound applicant is further defined as a person whose residence is located in an area served by a branch campus who, because of family or employment commitments, health concerns, monetary need, or other similar factors, would be unable to complete an upper-division course of study but for receipt of an educational opportunity ((~~grant~~)) loan.

Sec. 7. RCW 28B.101.030 and 1990 c 288 s 5 are each amended to read as follows:

The higher education coordinating board shall develop and administer the educational opportunity ((~~grant~~)) loan program. The board shall adopt necessary rules and guidelines and develop criteria and procedures to select eligible participants in the program. ((~~Payment~~)) Loans shall be made directly to the eligible participant periodically upon verification of enrollment and satisfactory progress towards degree completion. Beginning July 1, 1993, the educational opportunity grant program shall become the educational opportunity loan program, which shall be a subprogram of the state educational loan program. Loans made to eligible students under this program shall be made under the same terms and conditions as those made under the state educational loan program established in section 3 of this act. All funds appropriated for the support of this program shall be deposited in the state educational loan account created in RCW 28B.10.821.

Sec. 8. RCW 28B.101.040 and 1990 c 288 s 6 are each amended to read as follows:

((~~Grants~~)) Loans may be used by eligible participants to attend any public or private college or university in the state of Washington that has an existing unused capacity. ((~~Grants~~)) Loans shall not be used to attend any branch campus or educational program established under chapter 28B.45 RCW. The participant shall not be eligible for a ((~~grant~~)) loan if it will be used for any programs that include religious worship, exercise, or instruction or to pursue a degree in theology. Each participating student may receive ((~~up to~~)) a maximum loan of two thousand five hundred dollars per academic year, not to exceed the student's demonstrated financial need for the course of study.

NEW SECTION. Sec. 9. Sections 1 through 8 of this act shall take effect July 1, 1993.

NEW SECTION. Sec. 10. The higher education coordinating board may take such action as it deems necessary to be able to fully implement this act on its effective date.