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SB-1355 Postsecondary education: private student loans.(2007-2008)

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SB1355:v93#DOCUMENT

Enrolled  August 22, 2008
Passed  IN  Senate  August 19, 2008
Passed  IN  Assembly  August 13, 2008
Amended  IN  Assembly  July 15, 2008
Amended  IN  Assembly  July 03, 2008
Amended  IN  Senate  May 13, 2008
Amended  IN  Senate  April 23, 2008
Amended  IN  Senate  April 01, 2008

CALIFORNIA LEGISLATURE— 2007–2008 REGULAR SESSION

Senate Bill
No. 1355

Introduced  by  Senator Corbett

February 20, 2008

An act to add Article 14.5 (commencing with Section 69800) to Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code, relating to student financial aid.


LEGISLATIVE COUNSEL'S DIGEST


SB 1355, Corbett. Postsecondary education: private student loans.
Existing law establishes the University of California, California State University, the California Community Colleges, and independent colleges and universities as the 4 segments of postsecondary education in this state. Existing law establishes various student financial aid programs for students attending all segments of postsecondary education.
This bill would, with certain exceptions, require a public or private postsecondary educational institution to make specified disclosures related to private student loans in financial aid material, distinguish private loans from federal loans in individual financial aid awards, and for any private loan lender list, provide general information on the terms of the loan available through the lender and disclose the reason for each lender’s inclusion on the list. The bill would apply to the University of California only to the extent that the Regents of the University of California act, by resolution, to make it applicable.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Article 14.5 (commencing with Section 69800) is added to Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code, to read:
Article  14.5. Private Student Loans

69800.
 A public or private postsecondary educational institution shall do all of the following:
(a) State all of the following in all printed and online financial aid materials issued or distributed by the institution to applicants for admission or matriculated students and with private loan applications provided or made available by the institution:
(1) Private loans are not guaranteed by the federal government.
(2) Private loans may cost more than federal loans.
(3) Federal Stafford loans are available to students regardless of income.
(b) Clearly distinguish private loans from federal loans in individual financial aid awards by stating, for any private loans offered by the institution as part of the institution’s award package, all of the following:
(1) The range of interest rates that may be charged on the private loan.
(2) Whether the rate is fixed or variable.
(3) If the interest rate on the loan is variable, the frequency of interest rate changes, the explanation for that rate change, and, if applicable, the maximum interest rate increase.
(4) Any and all fees associated with the assumption of the loan.
(5) An explanation that the interest rate on a private loan may depend on the borrower’s credit rating.
(c) For any private loan lender list, provide general information on the terms of the loan available through the lender and disclose the reason for each lender’s inclusion on the list. The institution shall also inform the student of his or her right to choose other lenders.
(d) (1) For purposes of this article, a private loan does not include a loan made directly by a public postsecondary educational institution or by an independent institution of higher education that has terms at least as favorable to the borrower as a federal Perkins loan.
(2) For purposes of this article, both of the following terms shall apply:
(A) “Independent institution of higher education” means those nonpublic higher education institutions that grant undergraduate degrees, graduate degrees, or both, and that are formed as nonprofit corporations in this state and are accredited by an agency recognized by the United States Department of Education.
(B) “Public postsecondary educational institution” includes the University of California, the California State University, and the California Community Colleges.

69802.
 This article shall apply to the University of California only to the extent that the Regents of the University of California act, by resolution, to make it applicable.