BILL REQ. #:  H-5123.1 

READ FIRST TIME 02/09/10.   

     AN ACT Relating to making changes to the state higher education loan program; amending RCW 28B.97.010, 28B.97.020, and 43.79A.040; adding a new section to chapter 28B.97 RCW; creating a new section; and repealing RCW 28B.07.300, 28B.07.310, 28B.07.320, 28B.07.330, 28B.07.340, 28B.07.350, 28B.07.360, 28B.07.370, and 28B.07.380.

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

NEW SECTION.  Sec. 1   (1) The legislature finds that postsecondary education provides multiple pathways to enhanced opportunities for skill development, career advancement, and community and civic involvement. To increase postsecondary access and affordability, the legislature maintains a distinguished record of investing in need-based student financial aid programs, totaling more than five hundred million dollars during the 2009-2011 biennium, serving more than eighty-five thousand students. These investments currently rank Washington fifth among all states with respect to need-based grant aid per full-time equivalent enrollment.
     (2) The legislature further finds that the principal source of financial aid to Washington students from the federal government is in the form of loans. Federal loan programs enable millions of deserving, high-achieving students to access postsecondary education. At the same time, however, the proportion of undergraduate students nationally who took out a private student loan increased from five percent in the 2003-04 academic year to fourteen percent in the 2007-08 academic year. Nearly two-thirds of private loan borrowers in academic year 2007-08 borrowed less than they could have in Stafford loans.
     (3) It is therefore the intent of the legislature to design and operate a state higher education loan program with the goals of: (a) Increasing postsecondary access and affordability for low and middle-income students in order to maintain the dream of opportunity for all; (b) reducing reliance on private student loans that often lack the borrower protections, fixed rates, and affordable repayment options as do federal student loans; and (c) complementing existing federal financial aid programs, including proposed changes that would maintain low interest rates on subsidized student loans while strengthening the direct loan program.
     (4) It is further the intent of the legislature in designing and operating the Washington higher education loan program that: (a) The eligibility criteria and associated benefits be clearly defined; (b) policymakers seek a stable and predictable source of funding; (c) it be self-supporting in its operation; and (d) self-help aid not replace gift aid, to ensure that students are not overburdened with excessive debt loads that may affect their career and life aspirations and decisions.

Sec. 2   RCW 28B.97.010 and 2009 c 215 s 13 are each amended to read as follows:
     (1) The Washington higher education loan program is created. The program is created to assist eligible students in need of additional low-cost student loans and related loan benefits.
     (2) Moneys for the program shall be deposited in the Washington higher education loan program account established in section 4 of this act. The principal and interest from these moneys shall be used for loan activities described in this section, including administrative expenses necessary to perform the duties in this section.
     (3) The program shall be administered by the board. In administering the program, the board must:
     (a) Periodically assess the needs and target the benefits to selected students;
     (b) Establish an annual loan limit equal to the cost of attendance minus any other financial aid received;
     (c) Devise a program to address the following issues related to loans:
     (i) Issuance of low-interest educational loans;
     (ii) Determining loan repayment obligations and options;
     (iii) Borrowing educational loans at low interest rates;
     (iv) Developing conditional loans that can be forgiven in exchange for service; and
     (v) Creating an emergency loan fund to help students until other state and federal long-term financing can be secured;
     (((c))) (d) Accept public and private contributions;
     (((d))) (e) Publicize the program; ((and
     (e))) (f) As appropriate, repay loans on behalf of selected students, collect repayments, and forgive loans; and
     (g) Work with public and private colleges and universities, career colleges, the state board for community and technical colleges, the workforce training and education coordinating board, and with students, to conduct periodic assessment of program needs. The board may also consult with other groups and individuals as needed.

Sec. 3   RCW 28B.97.020 and 2009 c 215 s 14 are each amended to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Board" means the higher education coordinating board.
     (2) "Eligible student" means a student who meets all of the following criteria:
     (a) Has an annual family income, adjusted for family size, that is no greater than one hundred thirty percent of the Washington state median family income;
     (b) Has completed the free application for federal student aid;
     (c) Is a resident student as defined in RCW 28B.15.012(2) (a) through (d);
     (d) Is not enrolled in theology as a field of study;
     (e) Is enrolled at least half time in a first aid-eligible certificate program or in a program leading to a first academic or technical associate degree, or bachelor's or graduate or professional degree;
     (f) Maintains satisfactory academic progress as determined by the attending institution;
     (g) Is not delinquent or in default on a federal or state student loan; and
     (h) Is not past due in child support obligations.
     (3) "Forgive" or "forgiven" means to render service in an occupation or occupational area, identified and approved by the board, in lieu of monetary repayment.
     (4) "Institution of higher education" means a college or university in the state of Washington that is accredited by an accrediting association recognized as such by rule of the board.
     (((3))) (5) "Program" means the Washington higher education loan program.
     (((4))) (6) "Resident student" has the definition in RCW 28B.15.012(2) (a) through (d).

NEW SECTION.  Sec. 4   A new section is added to chapter 28B.97 RCW to read as follows:
     (1) The Washington higher education loan program account is created in the custody of the state treasurer. An appropriation is not required for expenditures of funds from the account. The account is not subject to allotment procedures under chapter 43.88 RCW except for moneys used for program administration.
     (2) The board shall deposit in the account all moneys received for the Washington higher education loan program. The account shall be self-sustaining and consist of state general fund appropriations made by the legislature for the Washington higher education loan program, private contributions to the program, and receipts from participant repayments.
     (3) Expenditures from the account may be used solely for the purposes authorized in this chapter and costs associated with program administration by the board.
     (4) Disbursements from the account may be made only on the authorization of the board.

Sec. 5   RCW 43.79A.040 and 2009 c 87 s 4 are each amended to read as follows:
     (1) Money in the treasurer's trust fund may be deposited, invested, and reinvested by the state treasurer in accordance with RCW 43.84.080 in the same manner and to the same extent as if the money were in the state treasury.
     (2) All income received from investment of the treasurer's trust fund shall be set aside in an account in the treasury trust fund to be known as the investment income account.
     (3) The investment income account may be utilized for the payment of purchased banking services on behalf of treasurer's trust funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasurer or affected state agencies. The investment income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions. Payments shall occur prior to distribution of earnings set forth in subsection (4) of this section.
     (4)(a) Monthly, the state treasurer shall distribute the earnings credited to the investment income account to the state general fund except under (b) and (c) of this subsection.
     (b) The following accounts and funds shall receive their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The Washington promise scholarship account, the college savings program account, the Washington advanced college tuition payment program account, the agricultural local fund, the American Indian scholarship endowment fund, the foster care scholarship endowment fund, the foster care endowed scholarship trust fund, the students with dependents grant account, the basic health plan self-insurance reserve account, the contract harvesting revolving account, the Washington state combined fund drive account, the commemorative works account, the Washington international exchange scholarship endowment fund, the toll collection account, the developmental disabilities endowment trust fund, the energy account, the fair fund, the family leave insurance account, the food animal veterinarian conditional scholarship account, the fruit and vegetable inspection account, the future teachers conditional scholarship account, the game farm alternative account, the GET ready for math and science scholarship account, the grain inspection revolving fund, the Washington higher education loan program account, the juvenile accountability incentive account, the law enforcement officers' and firefighters' plan 2 expense fund, the local tourism promotion account, the pilotage account, the produce railcar pool account, the regional transportation investment district account, the rural rehabilitation account, the stadium and exhibition center account, the youth athletic facility account, the self-insurance revolving fund, the sulfur dioxide abatement account, the children's trust fund, the Washington horse racing commission Washington bred owners' bonus fund and breeder awards account, the Washington horse racing commission class C purse fund account, the individual development account program account, the Washington horse racing commission operating account (earnings from the Washington horse racing commission operating account must be credited to the Washington horse racing commission class C purse fund account), the life sciences discovery fund, the Washington state heritage center account, the reduced cigarette ignition propensity account, and the reading achievement account. However, the earnings to be distributed shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.
     (c) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The advanced right-of-way revolving fund, the advanced environmental mitigation revolving account, the city and county advance right-of-way revolving fund, the federal narcotics asset forfeitures account, the high occupancy vehicle account, the local rail service assistance account, and the miscellaneous transportation programs account.
     (5) In conformance with Article II, section 37 of the state Constitution, no trust accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

NEW SECTION.  Sec. 6   The following acts or parts of acts are each repealed:
     (1) RCW 28B.07.300 (Student loan financing -- Authority -- Liability) and 2007 c 36 s 3;
     (2) RCW 28B.07.310 (Administration of alternative state educational loans) and 2007 c 36 s 4;
     (3) RCW 28B.07.320 (Revenue bonds -- Issuance -- Payment -- Personal liability) and 2007 c 36 s 5;
     (4) RCW 28B.07.330 (Revenue refunding bonds) and 2007 c 36 s 6;
     (5) RCW 28B.07.340 (Trust funds -- Trust agreements) and 2007 c 36 s 7;
     (6) RCW 28B.07.350 (Proceeds fund) and 2007 c 36 s 8;
     (7) RCW 28B.07.360 (Default) and 2007 c 36 s 9;
     (8) RCW 28B.07.370 (Debt limitation) and 2007 c 36 s 11; and
     (9) RCW 28B.07.380 (Sale of assets) and 2007 c 36 s 12.