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, any
postsecondary educational institution that meets the standards
established by the commission. However, an eligible institution does
not include a postsecondary educational institution offering
exclusively 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 eligibility
criteria for the initial and continuing participation of approved
lenders 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 approved
lenders upon conditions prescribed by the commission to residents
who attend or plan to attend eligible institutions in Indiana or
elsewhere, to assist the residents in meeting education expenses. The
commission shall guarantee at least one hundred percent (100%) of
the principal and interest on the loans. However, the rate of interest
on guaranteed loans may not exceed the annual rate of simple interest
prescribed 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 to
either one (1) or both parents of a student, who attends or plans to
attend an eligible institution, who is at least a half-time student, and
who 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 guaranty
agreements with approved lenders, state governmental agencies,
other corporations, and federal governmental agencies, including
agreements 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 guaranteed
under this chapter be disbursed and repaid in the manner and time
that 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's
qualified status upon finding, after reasonable notice and hearing,
that the eligible institution fails to meet the standards established by
the commission. The commission may direct the Indiana commission
on proprietary education to review a school under its jurisdiction, or
a comparable school outside Indiana that is an eligible institution
under this chapter. The commission may use the results of the review
to determine whether to remove an eligible institution's qualified
status. 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 not
more than one percent (1%) per annum of the principal amount of the
loan. The premium must be calculated in accordance with federal
regulations. 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 behalf
of the loan program and for purposes of this chapter, property,
money, and the interest and income derived from them either
absolutely or in trust. The commission may accept gifts, grants,
bequests, devises, and loans for the purposes of this chapter. An
obligation of the loan program for losses on student loans resulting
from death, default, bankruptcy, or total or permanent disability of
borrowers is not a debt of the state, but is payable solely from the
fund. 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 reason
to believe that a lender or an eligible institution fails to meet the
eligibility criteria for approved lenders, the commission or its
designee shall call the matter to the attention of the lender or eligible
institution. The lender or eligible institution is entitled to a
reasonable opportunity to respond to the allegation and, if the alleged
violation occurred, to show that it is corrected or to submit an
acceptable plan detailing measures that will be taken to correct the
violation and prevent its recurrence.
(b) Upon finding, after reasonable notice and hearing, that a
lender or eligible institution fails to meet the eligibility criteria for
approved lenders, the commission may:
(1) limit the number or total amount of loans which the lender
or eligible institution may make under this chapter;
(2) limit the percentage of an eligible institution's total receipts
for tuition and fees which may be derived from loans under this
chapter for a stated period;
(3) require an eligible institution to obtain a bond, in an
appropriate amount, to provide assurance that it will be able to
meet its financial obligations to students enrolled in eligible
institutions who received loans under this chapter; and
(4) impose other conditions or requirements on lenders or
eligible institutions, or both, that:
(i) are reasonable and appropriate as a direct means of
correcting a violation;
(ii) have a high probability for successfully correcting the
violation; 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 deposited
with the treasurer of state in a separate account known as the
"student loan program fund". The money remaining in the student
loan program fund at the end of a state fiscal year does not revert to
the state general fund but remains available to be used for providing
student loans under this chapter. After consultation with the program
director of the loan program, the treasurer of state shall invest the
funds. 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 the
program 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 preclude
any forbearance for the benefit of the borrower agreed upon by the
parties 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 other
enforcement proceedings upon security for the loan, the holder of the
guaranteed loan obligation shall promptly notify the commission and
the commission shall pay the holder of that loan as soon as the
amount is determined. The commission shall determine the amount
of loss in accordance with its rules; however, the amount of loss may
not exceed the unpaid balance of the principal amount and the unpaid
accrued 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 part
of the loss upon a default by a borrower, the commission shall be
subrogated to the rights of the holder of the obligation upon the
insured loan and is entitled to an assignment of the note or other
evidence 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 reasonable
care and diligence in the making and collection of loans under this
chapter. If the commission finds that reasonable care and diligence
are not being exercised by a holder of a guaranteed loan, the
commission may:
(1) withdraw its guarantee on an individual borrower basis,
allowing the approved lender to continue participation in the
program, after reasonable notice to the lender; or
(2) disqualify the approved lender from the guarantee of further
loans upon finding, after reasonable notice and hearing, that the
lender has substantially failed to exercise reasonable care and
diligence in the making and collection of loans under this
chapter.
These disqualifications shall continue until the commission is
satisfied that the lender will exercise reasonable care and diligence
in 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 be
dissolved until all guaranteed loans have been repaid by the borrower
or, if in default, by the commission. Upon dissolution of the loan
program, all the property and money of the program not owed to the
federal 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 the
commission. When the collection of loans on which the commission
has met its guarantee obligation requires legal action outside the state
of Indiana, the commission, upon the recommendation of the attorney
general, may employ private, out of state counsel and expend its own
funds to pay for this service. As added by P.L.2-2007, SEC.257.
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, any
postsecondary educational institution that meets the standards
established by the commission. However, an eligible institution does
not include a postsecondary educational institution offering
exclusively 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 eligibility
criteria for the initial and continuing participation of approved
lenders 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 approved
lenders upon conditions prescribed by the commission to residents
who attend or plan to attend eligible institutions in Indiana or
elsewhere, to assist the residents in meeting education expenses. The
commission shall guarantee at least one hundred percent (100%) of
the principal and interest on the loans. However, the rate of interest
on guaranteed loans may not exceed the annual rate of simple interest
prescribed 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 to
either one (1) or both parents of a student, who attends or plans to
attend an eligible institution, who is at least a half-time student, and
who 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 guaranty
agreements with approved lenders, state governmental agencies,
other corporations, and federal governmental agencies, including
agreements 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 guaranteed
under this chapter be disbursed and repaid in the manner and time
that 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's
qualified status upon finding, after reasonable notice and hearing,
that the eligible institution fails to meet the standards established by
the commission. The commission may direct the Indiana commission
on proprietary education to review a school under its jurisdiction, or
a comparable school outside Indiana that is an eligible institution
under this chapter. The commission may use the results of the review
to determine whether to remove an eligible institution's qualified
status. 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 not
more than one percent (1%) per annum of the principal amount of the
loan. The premium must be calculated in accordance with federal
regulations. 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 behalf
of the loan program and for purposes of this chapter, property,
money, and the interest and income derived from them either
absolutely or in trust. The commission may accept gifts, grants,
bequests, devises, and loans for the purposes of this chapter. An
obligation of the loan program for losses on student loans resulting
from death, default, bankruptcy, or total or permanent disability of
borrowers is not a debt of the state, but is payable solely from the
fund. 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 reason
to believe that a lender or an eligible institution fails to meet the
eligibility criteria for approved lenders, the commission or its
designee shall call the matter to the attention of the lender or eligible
institution. The lender or eligible institution is entitled to a
reasonable opportunity to respond to the allegation and, if the alleged
violation occurred, to show that it is corrected or to submit an
acceptable plan detailing measures that will be taken to correct the
violation and prevent its recurrence.
(b) Upon finding, after reasonable notice and hearing, that a
lender or eligible institution fails to meet the eligibility criteria for
approved lenders, the commission may:
(1) limit the number or total amount of loans which the lender
or eligible institution may make under this chapter;
(2) limit the percentage of an eligible institution's total receipts
for tuition and fees which may be derived from loans under this
chapter for a stated period;
(3) require an eligible institution to obtain a bond, in an
appropriate amount, to provide assurance that it will be able to
meet its financial obligations to students enrolled in eligible
institutions who received loans under this chapter; and
(4) impose other conditions or requirements on lenders or
eligible institutions, or both, that:
(i) are reasonable and appropriate as a direct means of
correcting a violation;
(ii) have a high probability for successfully correcting the
violation; 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 deposited
with the treasurer of state in a separate account known as the
"student loan program fund". The money remaining in the student
loan program fund at the end of a state fiscal year does not revert to
the state general fund but remains available to be used for providing
student loans under this chapter. After consultation with the program
director of the loan program, the treasurer of state shall invest the
funds. 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 the
program 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 preclude
any forbearance for the benefit of the borrower agreed upon by the
parties 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 other
enforcement proceedings upon security for the loan, the holder of the
guaranteed loan obligation shall promptly notify the commission and
the commission shall pay the holder of that loan as soon as the
amount is determined. The commission shall determine the amount
of loss in accordance with its rules; however, the amount of loss may
not exceed the unpaid balance of the principal amount and the unpaid
accrued 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 part
of the loss upon a default by a borrower, the commission shall be
subrogated to the rights of the holder of the obligation upon the
insured loan and is entitled to an assignment of the note or other
evidence 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 reasonable
care and diligence in the making and collection of loans under this
chapter. If the commission finds that reasonable care and diligence
are not being exercised by a holder of a guaranteed loan, the
commission may:
(1) withdraw its guarantee on an individual borrower basis,
allowing the approved lender to continue participation in the
program, after reasonable notice to the lender; or
(2) disqualify the approved lender from the guarantee of further
loans upon finding, after reasonable notice and hearing, that the
lender has substantially failed to exercise reasonable care and
diligence in the making and collection of loans under this
chapter.
These disqualifications shall continue until the commission is
satisfied that the lender will exercise reasonable care and diligence
in 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 be
dissolved until all guaranteed loans have been repaid by the borrower
or, if in default, by the commission. Upon dissolution of the loan
program, all the property and money of the program not owed to the
federal 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 the
commission. When the collection of loans on which the commission
has met its guarantee obligation requires legal action outside the state
of Indiana, the commission, upon the recommendation of the attorney
general, may employ private, out of state counsel and expend its own
funds to pay for this service. As added by P.L.2-2007, SEC.257.
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, any
postsecondary educational institution that meets the standards
established by the commission. However, an eligible institution does
not include a postsecondary educational institution offering
exclusively 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 eligibility
criteria for the initial and continuing participation of approved
lenders 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 approved
lenders upon conditions prescribed by the commission to residents
who attend or plan to attend eligible institutions in Indiana or
elsewhere, to assist the residents in meeting education expenses. The
commission shall guarantee at least one hundred percent (100%) of
the principal and interest on the loans. However, the rate of interest
on guaranteed loans may not exceed the annual rate of simple interest
prescribed 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 to
either one (1) or both parents of a student, who attends or plans to
attend an eligible institution, who is at least a half-time student, and
who 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 guaranty
agreements with approved lenders, state governmental agencies,
other corporations, and federal governmental agencies, including
agreements 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 guaranteed
under this chapter be disbursed and repaid in the manner and time
that 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's
qualified status upon finding, after reasonable notice and hearing,
that the eligible institution fails to meet the standards established by
the commission. The commission may direct the Indiana commission
on proprietary education to review a school under its jurisdiction, or
a comparable school outside Indiana that is an eligible institution
under this chapter. The commission may use the results of the review
to determine whether to remove an eligible institution's qualified
status. 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 not
more than one percent (1%) per annum of the principal amount of the
loan. The premium must be calculated in accordance with federal
regulations. 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 behalf
of the loan program and for purposes of this chapter, property,
money, and the interest and income derived from them either
absolutely or in trust. The commission may accept gifts, grants,
bequests, devises, and loans for the purposes of this chapter. An
obligation of the loan program for losses on student loans resulting
from death, default, bankruptcy, or total or permanent disability of
borrowers is not a debt of the state, but is payable solely from the
fund. 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 reason
to believe that a lender or an eligible institution fails to meet the
eligibility criteria for approved lenders, the commission or its
designee shall call the matter to the attention of the lender or eligible
institution. The lender or eligible institution is entitled to a
reasonable opportunity to respond to the allegation and, if the alleged
violation occurred, to show that it is corrected or to submit an
acceptable plan detailing measures that will be taken to correct the
violation and prevent its recurrence.
(b) Upon finding, after reasonable notice and hearing, that a
lender or eligible institution fails to meet the eligibility criteria for
approved lenders, the commission may:
(1) limit the number or total amount of loans which the lender
or eligible institution may make under this chapter;
(2) limit the percentage of an eligible institution's total receipts
for tuition and fees which may be derived from loans under this
chapter for a stated period;
(3) require an eligible institution to obtain a bond, in an
appropriate amount, to provide assurance that it will be able to
meet its financial obligations to students enrolled in eligible
institutions who received loans under this chapter; and
(4) impose other conditions or requirements on lenders or
eligible institutions, or both, that:
(i) are reasonable and appropriate as a direct means of
correcting a violation;
(ii) have a high probability for successfully correcting the
violation; 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 deposited
with the treasurer of state in a separate account known as the
"student loan program fund". The money remaining in the student
loan program fund at the end of a state fiscal year does not revert to
the state general fund but remains available to be used for providing
student loans under this chapter. After consultation with the program
director of the loan program, the treasurer of state shall invest the
funds. 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 the
program 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 preclude
any forbearance for the benefit of the borrower agreed upon by the
parties 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 other
enforcement proceedings upon security for the loan, the holder of the
guaranteed loan obligation shall promptly notify the commission and
the commission shall pay the holder of that loan as soon as the
amount is determined. The commission shall determine the amount
of loss in accordance with its rules; however, the amount of loss may
not exceed the unpaid balance of the principal amount and the unpaid
accrued 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 part
of the loss upon a default by a borrower, the commission shall be
subrogated to the rights of the holder of the obligation upon the
insured loan and is entitled to an assignment of the note or other
evidence 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 reasonable
care and diligence in the making and collection of loans under this
chapter. If the commission finds that reasonable care and diligence
are not being exercised by a holder of a guaranteed loan, the
commission may:
(1) withdraw its guarantee on an individual borrower basis,
allowing the approved lender to continue participation in the
program, after reasonable notice to the lender; or
(2) disqualify the approved lender from the guarantee of further
loans upon finding, after reasonable notice and hearing, that the
lender has substantially failed to exercise reasonable care and
diligence in the making and collection of loans under this
chapter.
These disqualifications shall continue until the commission is
satisfied that the lender will exercise reasonable care and diligence
in 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 be
dissolved until all guaranteed loans have been repaid by the borrower
or, if in default, by the commission. Upon dissolution of the loan
program, all the property and money of the program not owed to the
federal 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 the
commission. When the collection of loans on which the commission
has met its guarantee obligation requires legal action outside the state
of Indiana, the commission, upon the recommendation of the attorney
general, may employ private, out of state counsel and expend its own
funds to pay for this service. As added by P.L.2-2007, SEC.257.
