CHAPTER 4. GUARANTEED STUDENT LOAN PROGRAM

IC 21-16-4
    Chapter 4. Guaranteed Student Loan Program

IC 21-16-4-1
Eligible institutions; approval by the commission
    Sec. 1. The commission may approve, as eligible institutions, anypostsecondary educational institution that meets the standardsestablished by the commission. However, an eligible institution doesnot include a postsecondary educational institution offeringexclusively correspondence or home study courses.
As added by P.L.2-2007, SEC.257.

IC 21-16-4-2
Criteria for approved lenders
    Sec. 2. The commission may establish reasonable eligibilitycriteria for the initial and continuing participation of approvedlenders in the student loan program.
As added by P.L.2-2007, SEC.257.

IC 21-16-4-3
Lender conditions; guarantee percentage; interest rate
    Sec. 3. The commission may guarantee loans made by approvedlenders upon conditions prescribed by the commission to residentswho attend or plan to attend eligible institutions in Indiana orelsewhere, to assist the residents in meeting education expenses. Thecommission shall guarantee at least one hundred percent (100%) ofthe principal and interest on the loans. However, the rate of intereston guaranteed loans may not exceed the annual rate of simple interestprescribed for state student loan programs under federal law.
As added by P.L.2-2007, SEC.257.

IC 21-16-4-4
Loan applicability
    Sec. 4. The commission may guarantee loans to a student, or toeither one (1) or both parents of a student, who attends or plans toattend an eligible institution, who is at least a half-time student, andwho is accepted by the eligible institution.
As added by P.L.2-2007, SEC.257.

IC 21-16-4-5
Contracts and guaranty agreements
    Sec. 5. The commission may enter into contracts and guarantyagreements with approved lenders, state governmental agencies,other corporations, and federal governmental agencies, includingagreements for federal insurance of losses resulting from death,default, bankruptcy, or total and permanent disability of borrowers.
As added by P.L.2-2007, SEC.257.

IC 21-16-4-6
Loan requirements    Sec. 6. The commission may require that any loan guaranteedunder this chapter be disbursed and repaid in the manner and timethat the commission prescribes.
As added by P.L.2-2007, SEC.257.

IC 21-16-4-7
Eligible institution's qualified status; removal; review
    Sec. 7. The commission may remove an eligible institution'squalified status upon finding, after reasonable notice and hearing,that the eligible institution fails to meet the standards established bythe commission. The commission may direct the Indiana commissionon proprietary education to review a school under its jurisdiction, ora comparable school outside Indiana that is an eligible institutionunder this chapter. The commission may use the results of the reviewto determine whether to remove an eligible institution's qualifiedstatus.
As added by P.L.2-2007, SEC.257.

IC 21-16-4-8
Collection of insurance premium
    Sec. 8. The commission may collect an insurance premium of notmore than one percent (1%) per annum of the principal amount of theloan. The premium must be calculated in accordance with federalregulations.
As added by P.L.2-2007, SEC.257.

IC 21-16-4-9
Administration of loan program
    Sec. 9. The commission may take, hold, and administer, on behalfof the loan program and for purposes of this chapter, property,money, and the interest and income derived from them eitherabsolutely or in trust. The commission may accept gifts, grants,bequests, devises, and loans for the purposes of this chapter. Anobligation of the loan program for losses on student loans resultingfrom death, default, bankruptcy, or total or permanent disability ofborrowers is not a debt of the state, but is payable solely from thefund.
As added by P.L.2-2007, SEC.257.

IC 21-16-4-10
Eligibility criteria violation procedures
    Sec. 10. (a) Whenever the commission or its designee has reasonto believe that a lender or an eligible institution fails to meet theeligibility criteria for approved lenders, the commission or itsdesignee shall call the matter to the attention of the lender or eligibleinstitution. The lender or eligible institution is entitled to areasonable opportunity to respond to the allegation and, if the allegedviolation occurred, to show that it is corrected or to submit anacceptable plan detailing measures that will be taken to correct theviolation and prevent its recurrence.    (b) Upon finding, after reasonable notice and hearing, that alender or eligible institution fails to meet the eligibility criteria forapproved lenders, the commission may:
        (1) limit the number or total amount of loans which the lenderor eligible institution may make under this chapter;
        (2) limit the percentage of an eligible institution's total receiptsfor tuition and fees which may be derived from loans under thischapter for a stated period;
        (3) require an eligible institution to obtain a bond, in anappropriate amount, to provide assurance that it will be able tomeet its financial obligations to students enrolled in eligibleinstitutions who received loans under this chapter; and
        (4) impose other conditions or requirements on lenders oreligible institutions, or both, that:
            (i) are reasonable and appropriate as a direct means ofcorrecting a violation;
            (ii) have a high probability for successfully correcting theviolation; and
            (iii) will promote the purposes of this chapter.
As added by P.L.2-2007, SEC.257.

IC 21-16-4-11
Student loan program fund; administration
    Sec. 11. Funds received under the loan program shall be depositedwith the treasurer of state in a separate account known as the"student loan program fund". The money remaining in the studentloan program fund at the end of a state fiscal year does not revert tothe state general fund but remains available to be used for providingstudent loans under this chapter. After consultation with the programdirector of the loan program, the treasurer of state shall invest thefunds. The income earned on the invested amount is part of the fund.
As added by P.L.2-2007, SEC.257. Amended by P.L.234-2007,SEC.50.

IC 21-16-4-12
Tax exemption
    Sec. 12. The property, income, obligations, and activities of theprogram are exempt from all state and local taxation.
As added by P.L.2-2007, SEC.257.

IC 21-16-4-13
Forbearance
    Sec. 13. Sections 14 through 16 of this chapter do not precludeany forbearance for the benefit of the borrower agreed upon by theparties to the guaranteed loan and the commission.
As added by P.L.2-2007, SEC.257.

IC 21-16-4-14
Default; procedures
    Sec. 14. Upon default by a borrower on a loan guaranteed under

this chapter, and before the commencement of a suit or otherenforcement proceedings upon security for the loan, the holder of theguaranteed loan obligation shall promptly notify the commission andthe commission shall pay the holder of that loan as soon as theamount is determined. The commission shall determine the amountof loss in accordance with its rules; however, the amount of loss maynot exceed the unpaid balance of the principal amount and the unpaidaccrued interest.
As added by P.L.2-2007, SEC.257.

IC 21-16-4-15
Payment on loss; subrogation rights
    Sec. 15. Upon payment by the commission of the guaranteed partof the loss upon a default by a borrower, the commission shall besubrogated to the rights of the holder of the obligation upon theinsured loan and is entitled to an assignment of the note or otherevidence of the guaranteed loan by the holder.
As added by P.L.2-2007, SEC.257.

IC 21-16-4-16
Holder of guarantee loans; duties
    Sec. 16. A holder of a guaranteed loan shall exercise reasonablecare and diligence in the making and collection of loans under thischapter. If the commission finds that reasonable care and diligenceare not being exercised by a holder of a guaranteed loan, thecommission may:
        (1) withdraw its guarantee on an individual borrower basis,allowing the approved lender to continue participation in theprogram, after reasonable notice to the lender; or
        (2) disqualify the approved lender from the guarantee of furtherloans upon finding, after reasonable notice and hearing, that thelender has substantially failed to exercise reasonable care anddiligence in the making and collection of loans under thischapter.
These disqualifications shall continue until the commission issatisfied that the lender will exercise reasonable care and diligencein the future.
As added by P.L.2-2007, SEC.257.

IC 21-16-4-17
Dissolution of loan program
    Sec. 17. The loan program established by this chapter may not bedissolved until all guaranteed loans have been repaid by the borroweror, if in default, by the commission. Upon dissolution of the loanprogram, all the property and money of the program not owed to thefederal government vests in the state general fund.
As added by P.L.2-2007, SEC.257.

IC 21-16-4-18
Legal representation; attorney general; private attorney    Sec. 18. The attorney general shall act as legal counsel to thecommission. When the collection of loans on which the commissionhas met its guarantee obligation requires legal action outside the stateof Indiana, the commission, upon the recommendation of the attorneygeneral, may employ private, out of state counsel and expend its ownfunds to pay for this service.
As added by P.L.2-2007, SEC.257.