CHAPTER 5. SECONDARY MARKET FOR GUARANTEED STUDENT LOANS

IC 21-16-5
    Chapter 5. Secondary Market for Guaranteed Student Loans

IC 21-16-5-1
Secondary market for guaranteed student loans; establishment ofcorporation
    Sec. 1. The governor may request, on behalf of the state, theestablishment of a private nonprofit corporation, with a bipartisanboard of directors, to serve as a secondary market for educationloans. If a private nonprofit corporation is established, the governormay designate the corporation to:
        (1) serve as the secondary market for education loans; and
        (2) act as an eligible lender under a federal program.
The corporation must satisfy the conditions imposed by sections 3through 10 of this chapter, and its articles of incorporation mustprovide that upon the corporation's liquidation, any surplus fundsmust be paid to the state.
As added by P.L.2-2007, SEC.257.

IC 21-16-5-2
Public hearing; notice
    Sec. 2. Before designation by the governor under section 1 of thischapter, the corporation shall conduct a public hearing to give allinterested parties an opportunity to review and comment upon thebylaws and method of operation of the corporation. Notice of thishearing must be given at least fourteen (14) days before the hearingin the manner set out in IC 5-14-1.5-5(b).
As added by P.L.2-2007, SEC.257.

IC 21-16-5-3
Powers of corporation; articles of incorporation
    Sec. 3. (a) The corporation must, under its articles ofincorporation, limit its powers to those described in subsection (b).
    (b) The corporation may:
        (1) borrow money;
        (2) purchase, sell, and retire education loans, if the loans are notin default status;
        (3) provide incentive services and payments, including thepayment of premiums for the purchase of education loans andthe payment of an origination fee, to assist lending institutionsthat provide education loans;
        (4) loan funds to lending institutions if:
            (A) the lending institution agrees to use the funds tooriginate education loans of an amount equal to the loanmade by the corporation over a period agreeable to thecorporation and to grant the corporation the right of firstrefusal to purchase those education loans;
            (B) the lending institution agrees to use education loans orgovernment securities as collateral for the loan; and
            (C) the corporation has, in response to its written request,

received written authorization from the governor to exercisethe power described in this subdivision;
        (5) establish after consultation with the associationsrepresenting the private lenders of Indiana and, at the directionof the governor, a direct lending program under which thecorporation may make education loans:
            (A) to eligible borrowers under a federal program; and
            (B) if the corporation determines that the borrowers cannotreasonably obtain an education loan from a lendinginstitution in Indiana;
        (6) make direct loans to or for the benefit of an education loanborrower to consolidate all or a part of the borrower'soutstanding education loans into one (1) loan;
        (7) operate a secondary market for postsecondary educationfinance instruments, including tuition certificates and educationsavings certificates sold by or offered through lendinginstitutions or postsecondary educational institutions; and
        (8) do all other things that are necessary or incidental toperforming the functions listed in subdivisions (1) through (7).
As added by P.L.2-2007, SEC.257.

IC 21-16-5-4
Annual report; annual public hearing
    Sec. 4. The corporation shall submit an annual report to thegovernor, which must include detailed information on the structure,operation, and financial status of the corporation. The corporationshall conduct an annual public hearing to receive comment frominterested parties regarding the report. Notice of the hearing must begiven at least fourteen (14) days before the hearing in accordancewith IC 5-14-1.5-5(b).
As added by P.L.2-2007, SEC.257.

IC 21-16-5-5
Changes in directors and bylaws
    Sec. 5. The corporation shall provide in its articles ofincorporation that changes in the composition of its directors or in itsbylaws are subject to the approval of the governor.
As added by P.L.2-2007, SEC.257.

IC 21-16-5-6
Annual audit
    Sec. 6. The corporation is subject to an annual audit by the stateboard of accounts. The corporation shall bear the full costs of thisaudit.
As added by P.L.2-2007, SEC.257.

IC 21-16-5-7
Board of directors; executive session
    Sec. 7. The board of directors of the corporation may meet inexecutive session to discuss negotiating strategies with respect to

financing arrangements or proposals, in addition to those items listedin IC 5-14-1.5-6.1.
As added by P.L.2-2007, SEC.257.

IC 21-16-5-8
Board of directors; meetings
    Sec. 8. Any or all members of the board of directors mayparticipate in a meeting of the board by means of a conferencetelephone or similar communications equipment by which a membercan communicate with each of the other board members if at leastthree (3) board members are present at the meeting. Participation bythese means does not violate IC 5-14-1.5.
As added by P.L.2-2007, SEC.257.

IC 21-16-5-9
Benefits of guaranty
    Sec. 9. The corporation and its transferees and pledgees, so longas they are eligible lenders under a federal program, are entitled tothe benefits of any guaranty given by the commission underIC 21-16-4 or any successor to the commission with respect toeducation loans owned or held by the corporation, its transferees, orits pledgees, as long as the corporation, its transferees, or its pledgeesare eligible lenders or holders of education loans under the rulesadopted under IC 4-22-2 by the commission or a successor to thecommission.
As added by P.L.2-2007, SEC.257.

IC 21-16-5-10
Grants; approval by the budget agency
    Sec. 10. Notwithstanding any other law, the commission may notmake grants for any purpose without approval by the budget agencyand the governor after review by the budget committee.
As added by P.L.2-2007, SEC.257.

IC 21-16-5-11
Debts incurred
    Sec. 11. Debts incurred by the corporation under authority of thischapter do not represent or constitute a debt of the state of Indianawithin the meaning of the provisions of the statutes of Indiana or theConstitution of the State of Indiana.
As added by P.L.2-2007, SEC.257.

IC 21-16-5-12
Principal and interest on bonds
    Sec. 12. The principal of and the interest on bonds and notesissued by the corporation under this chapter are exempt from taxationof every kind by the state and by the municipalities and otherpolitical subdivisions of the state, except taxes imposed underIC 6-4.1.
As added by P.L.2-2007, SEC.257.
IC 21-16-5-13
Investment of funds
    Sec. 13. All:
        (1) banks;
        (2) bankers;
        (3) trust companies;
        (4) savings banks and institutions;
        (5) building and loan associations;
        (6) saving and loan associations;
        (7) investment companies;
        (8) insurance companies and associations; and
        (9) executors, administrators, guardians, trustees, and otherfiduciaries;
may legally invest any sinking funds, money, or other funds thatbelong to them or are within their control in any bonds or notesissued under this chapter.
As added by P.L.2-2007, SEC.257.

IC 21-16-5-14
Termination of the designation
    Sec. 14. The designation by the governor under section 1 of thischapter remains in effect until the general assembly provides by lawfor termination of the designation.
As added by P.L.2-2007, SEC.257.

IC 21-16-5-15
Immunity for officers and directors
    Sec. 15. Except for an act of fraud or intentional misconduct, anofficer or director of the corporation is not individually liable for anact or omission regarding the exercise or performance of thatperson's duty to the corporation.
As added by P.L.2-2007, SEC.257.

IC 21-16-5-16
Security interest in education loans
    Sec. 16. Notwithstanding IC 26-1-9.1-310(a), a security interestin education loans is perfected by:
        (1) possession under IC 26-1-9.1-313; or
        (2) filing a financing statement in the office of the secretary ofstate under IC 26-1-9.1-501.
As added by P.L.2-2007, SEC.257.

IC 21-16-5-17
Secondary market sale fund; administration
    Sec. 17. (a) The secondary market sale fund is established toprovide money for school assessment testing and remediation,including reading recovery programs. The fund shall be administeredby the budget agency.
    (b) The expenses of administering the fund shall be paid frommoney in the fund. The fund consists of proceeds from the sale of

assets of the Indiana Secondary Market for Education Loans,Incorporated.
    (c) The treasurer of state shall invest the money in the fund notcurrently needed to meet the obligations of the fund in the samemanner as other public funds may be invested. Interest earned fromthese investments shall be credited to the fund.
    (d) Money in the fund at the end of a state fiscal year does notrevert to the state general fund but remains available to be used forproviding money for school assessment testing and remediation,including reading recovery programs as allowed under this chapter.
As added by P.L.2-2007, SEC.257. Amended by P.L.234-2007,SEC.51.