Code Section Group

Education Code - EDC

TITLE 3. POSTSECONDARY EDUCATION [66000 - 101060]

  ( Title 3 enacted by Stats. 1976, Ch. 1010. )

DIVISION 5. GENERAL PROVISIONS [66000 - 70110]

  ( Division 5 enacted by Stats. 1976, Ch. 1010. )

PART 42. STUDENT FINANCIAL AID PROGRAM [69400 - 70110]

  ( Part 42 enacted by Stats. 1976, Ch. 1010. )

CHAPTER 2. Student Financial Aid Programs [69500 - 70039]

  ( Chapter 2 enacted by Stats. 1976, Ch. 1010. )

ARTICLE 13. Federal Family Education Loan Program [69760 - 69779]
  ( Heading of Article 13 amended by Stats. 1995, Ch. 758, Sec. 76.5. )

69760.
  

California is hereby authorized to participate in the Federal Family Education Loan Program for eligible postsecondary students and their parents, which includes, but is not limited to, the Federal Stafford Loans, the Federal Unsubsidized Stafford Loans, the Federal Parent Loans for Undergraduate Students (PLUS), and the Federal Consolidation Loans. The programs shall be consistent with Title IV of the act of Congress entitled the “Higher Education Act of 1965” (P.L. 89-329) and extensions thereof, the Education Amendments of 1976 (P.L. 94-482), or any similar act of Congress, and the rules and regulations adopted under those acts.

(Amended by Stats. 1994, Ch. 485, Sec. 1. Effective January 1, 1995. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69761.
  

(a) The purposes of California’s participation in the Federal Family Education Loan Program are as follows:

(1) To ensure that, in meeting their educational costs, a source of loans is available to assist the greatest number of eligible resident students.

(2) To ensure that loans are available to eligible resident students that meet the criterion set forth in paragraph (1), the commission is authorized to provide a source of loans to eligible students within and outside California irrespective of their residence or the location of their educational institution, to assist them in meeting educational costs at eligible schools of their choice.

(3) To accept, receive and administer the funds provided under Title IV of the “Higher Education Act of 1965,” and extensions thereof, or any similar act of Congress in any jurisdiction permitted under the Higher Education Act.

(b) The Legislature finds and declares that subdivision (a), as amended during the 1999 portion of the 1999–2000 Regular Session, reflects the intent of the Legislature in enacting Chapter 961 of the Statutes of 1996, and is therefore declaratory of existing law.

(Amended by Stats. 1999, Ch. 636, Sec. 3. Effective January 1, 2000. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69761.5.
  

The commission shall serve as a state student loan guarantee agency, pursuant to P.L. 94-482, and subsequent federal regulations, including, but not limited to, the following provisions:

(a) The commission shall be the designated state agency for receiving any federal funds for administrative costs and payments of insurance obligations.

(b) Educational loans to undergraduate and graduate students, or to their parent or parents, or to undergraduate and graduate students and to their parent or parents, shall not exceed the limits provided in federal law.

(c) Participating educational institutions shall notify lenders and the commission of enrollment status changes and current addresses of participating students.

(d) No educational institution shall lend to more than 50 percent of its undergraduate students; this provision may be waived by the United States Secretary of Education if the limitation creates a hardship for present or prospective students.

(e) A student may receive a loan only if he or she is maintaining satisfactory progress in a course of study pursuant to practices of the institution in which the student is enrolled, and provided the student has not previously defaulted on any student loan. If a student has made satisfactory arrangements to repay a default on a previous student loan, the student may be eligible to receive a loan.

(f) An insurance premium may be charged student borrowers not to exceed the maximum rate allowable, pursuant to federal statutes and regulations.

(Amended by Stats. 1994, Ch. 485, Sec. 3. Effective January 1, 1995. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69761.7.
  

To promote responsible and timely repayment of guaranteed student loans, the commission shall establish a process to ensure regular, annual credit reporting on the repayment status of borrowers whose loans are guaranteed by the commission and whose paper has matured.

(Amended by Stats. 1994, Ch. 485, Sec. 4. Effective January 1, 1995. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69762.
  

Loans made pursuant to this chapter shall be made without regard to race, religion, creed, sex, sexual orientation, gender identity, or gender expression.

(Amended by Stats. 2011, Ch. 637, Sec. 9. Effective January 1, 2012. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69763.
  

(a) (1) The commission shall administer the Federal Family Education Loan Program as authorized pursuant to this chapter. The commission may enter into any contract with the United States Secretary of Education or any other federal officer or agency under Title IV of the Higher Education Act of 1965, any extension thereof, or any similar act of Congress, may cooperate with the government of the United States, or any agency or agencies thereof, in administration of the act of Congress and the rules and regulations adopted thereunder. The commission shall adopt any rules and regulations it deems necessary for the proper administration of this chapter.

(2) Loans or loan guarantees issued by the commission, irrespective of the domicile of the eligible student or the location of the educational institution attended by the eligible student, prior to the effective date of amendments made to this section during the 1999 portion of the 1999–2000 Regular Session, have been determined by the Legislature to be consistent with the purposes of California’s participation in the Federal Family Education Loan Program, and within the authority of the commission to administer that program, and consistent with the intent of the Legislature in enacting Chapter 961 of the Statutes of 1996.

(b) The rules and regulations adopted by the commission pursuant to this section shall include a provision authorizing the commission to impose a civil penalty in an amount not to exceed twenty-five thousand dollars ($25,000) per violation against any financial or educational institution that violates any applicable law, rule, regulation, limitation, consent agreement, or school or lender agreement, relative to a state financial aid program. The rules and regulations adopted pursuant to this section shall provide all of the following:

(1) No civil penalty shall be imposed against an institution without first affording that institution an opportunity to request a hearing and, if a request for a hearing is made, a hearing shall be held before a representative of the commission.

(2) No civil penalty shall be imposed against an institution unless an action against that institution has been initiated pursuant to Section 30302 or 30304 of Title 5 of the California Code of Regulations.

(c) Any moneys derived from the assessment of penalties pursuant to this section shall be deposited into the Student Loan Operating Fund.

(Amended by Stats. 1999, Ch. 636, Sec. 4. Effective January 1, 2000. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69763.1.
  

(a) If a borrower defaults on a guaranteed student loan and the lender’s default claim has been paid, the Student Aid Commission shall fulfill the collection efforts required by federal law, which includes initiating a civil suit against the borrower for repayment of the loan.

(b) After the period specified in federal law for commencing action, the amount of the promissory note, plus interest and costs, may be collected by the filing of a certificate requesting judgment pursuant to subdivision (c) or by other appropriate civil action.

(c) If the loan principal, interest, and predefault and collection costs are not paid when due, and there is evidence that the borrower does not intend to pay under the terms of the promissory note or promissory notes, the commission may file in the office of the Clerk of the Superior Court of Sacramento County, or any other county, a certificate specifying the amount of the loan principal, interest, and predefault and collection costs due, the name and last known address of the individual liable for the amount due, the fact that the commission has complied with all applicable state and federal laws in the computation of the amount due, and a request that judgment be entered against the individual in the amount of the loan principal, interest, and predefault and collection costs specified in the certificate.

(d) Prior to the filing of the certificate, the commission shall, by mail, notify the individual of the amount that is due and of the opportunity for a hearing. If a hearing is requested, 10 days’ notice shall be given of the time and place of the hearing, which shall be held in Sacramento County or, if properly requested, the county of residence of the person requesting the hearing. The hearing shall be conducted by a referee who shall submit findings and recommendations to the director of the commission, or an authorized representative, who shall decide the matter. The decision shall be effective upon notice to the interested parties. The director of the commission, or the authorized representative, may rescind the decision and reconsider the matter for good cause shown at any time within three years after the date the disputed loan first became due, or within one year from the hearing, whichever is later. If no hearing is requested within 15 days after mailing the notice required by this subdivision, the certificate required by subdivision (b) may be filed.

(Amended by Stats. 2002, Ch. 784, Sec. 90. Effective January 1, 2003. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69763.2.
  

(a) The clerk, immediately upon the filing of the certificate specified in Section 69763.1, shall enter a judgment for the people of the State of California against the individual in the amount of the loan principal, interest, and predefault and collection costs listed on the certificate. The clerk may file the judgment in the book entitled “California Student Aid Commission Judgments.”

(b) Execution shall issue upon the judgment specified in subdivision (a) upon request of the Student Aid Commission in the same manner as execution may issue upon other judgments as prescribed in the Code of Civil Procedure.

(c) At least 10 days before executing any writ to collect, the commission shall send notice of the intent to execute upon a writ to the borrower and to any cosigners, by certified mail, to the most recent addresses maintained in the files of the commission. Any person receiving the notice of the intent to execute upon a writ may request a hearing to contest the existence or the amount of the writ. At the request of the individual, the commission shall conduct a hearing pursuant to Section 69763.1, at which it shall be determined whether the loan principal, interest, and predefault and collection costs in the amount claimed by the commission are due and whether the individual named on the certificate is liable for the amount. If no hearing is requested, the execution shall be commenced for the garnishment of wages, the attachment of property, or other legal collection action.

(Amended by Stats. 2002, Ch. 784, Sec. 91. Effective January 1, 2003. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69763.3.
  

At any time before wages are garnished or a lien is placed on property, a borrower may pay the Student Aid Commission the amount of the recorded judgment, plus costs. If that payment is made, wage garnishment or the attachment of property shall not commence. The payment shall not constitute a waiver of the right to a hearing.

(Added by Stats. 1991, Ch. 659, Sec. 3. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69763.4.
  

If the Student Aid Commission, or an authorized agent, has reasonable cause to believe that a lien on property may be jeopardized within the 10-day notice-of-intent period, the lien may be filed without prior notice. The commission shall provide notice of the attachment of property by lien to the owner and to any other person known to be claiming an interest in the property, within 48 hours after filing, excluding Saturdays, Sundays, and the holidays specified in Section 6700 of the Government Code. Any hearing to contest the lien shall be requested within 10 days following transmittal of the notice.

(Added by Stats. 1991, Ch. 659, Sec. 4. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69764.
  

In the event that the amount of loans applied for under this article exceeds the amount of the loans that may be guaranteed pursuant to this article, the commission may establish a system of priorities for the approval of loans.

(Amended by Stats. 1989, Ch. 1113, Sec. 33.1. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69765.
  

(a) The commission shall guarantee any student loan made pursuant to this article in the amount specified in federal statutes and regulations.

(b) The commission shall establish the ratio of reserve funds to loans outstanding.

(Amended by Stats. 1994, Ch. 485, Sec. 6. Effective January 1, 1995. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69766.
  

(a) The Federal Student Loan Reserve Fund and the Student Loan Operating Fund are hereby created in the State Treasury. On January 1, 2000, the State Guaranteed Loan Reserve Fund shall cease to exist, and funds deposited, or required to be deposited, in that fund shall be transferred to the Federal Student Loan Reserve Fund or to the Student Loan Operating Fund and allocated to those funds in accordance with the requirements of federal law.

(b) All moneys received for the purposes of this article from federal, state, or local governments, including any moneys deposited in the State Guaranteed Loan Reserve Fund, or from other private or public sources, shall be deposited in the Federal Student Loan Reserve Fund or the Student Loan Operating Fund and allocated to those funds in accordance with the requirements of federal law. Funds deposited in the Federal Student Loan Reserve Fund or the Student Loan Operating Fund are not part of the General Fund, as defined in Section 16300 of the Government Code. No moneys from the General Fund shall be deposited in the Federal Student Loan Reserve Fund or the Student Loan Operating Fund.

(c) The contents of the Federal Student Loan Reserve Fund are federal funds, administered in accordance with federal laws and regulations. The contents of the Student Loan Operating Fund are state funds within the custody and control of the Student Aid Commission.

(d) Notwithstanding Section 13340 of the Government Code, all moneys deposited in the Federal Student Loan Reserve Fund and the Student Loan Operating Fund are hereby continuously appropriated, without regard to fiscal years, for purposes of this article. The continuous appropriation made by this section shall be available to assume the obligation under any outstanding budget act appropriation from the State Guaranteed Loan Reserve Fund as it existed prior to January 1, 2000. On or after the operative date of Article 2.4 (commencing with Section 69521), the expenditure of funds from the Student Loan Operating Fund is subject to the limitations set forth in Sections 69522 and 69526.

(e) Notwithstanding any other law, the Controller may use the moneys in the Student Loan Operating Fund for loans to the General Fund as provided in Sections 16310 and 16381 of the Government Code. However, interest shall be paid on all moneys loaned to the General Fund from the Student Loan Operating Fund. Interest payable shall be computed at a rate determined by the Pooled Money Investment Board to be the current earning rate of the fund from which loaned. This subdivision does not authorize any transfer that will interfere with the carrying out of the object for which the Student Loan Operating Fund was created.

(f) The total amount of all outstanding debts, obligations, and liabilities that may be incurred or created under this article or under Article 2.5 (commencing with Section 69522), including any obligation to repay to the United States any funds provided under Title IV of the “Higher Education Act of 1965,” and extensions thereof or amendments thereto, or any similar act of Congress, is limited to the amount contained in the Federal Student Loan Reserve Fund or the Student Loan Operating Fund, and the state shall not be liable to the United States, or to any other person or entity, beyond the amount contained in the Federal Student Loan Reserve Fund or the Student Loan Operating Fund for any debts, obligations, and liabilities.

(Amended by Stats. 2009, 3rd Ex. Sess., Ch. 9, Sec. 1. Effective February 20, 2009. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69766.1.
  

(a) Notwithstanding Section 13340 of the Government Code, in addition to the purposes for which funds are appropriated pursuant to Section 69766, there is hereby continuously appropriated from the Federal Student Loan Reserve Fund and the Student Loan Operating Fund to the commission, the amount of funds necessary to make payments for the purchase of defaulted loans.

(b) Notwithstanding Section 13340 of the Government Code, there is hereby continuously appropriated from the Student Loan Operating Fund for transfer to the Federal Student Loan Reserve Fund, all federal reinsurance payments received on defaulted student loans and deposited in the Student Loan Operating Fund.

(c) The appropriation authorized by this section shall be operative only if the annual Budget Act for the fiscal year is not chaptered on or before July 15, and shall not exceed the amount deemed by the commission to be required by federal law or regulation. The commission shall notify the Joint Legislative Budget Committee of the amount of any payments issued pursuant to this section.

(Amended by Stats. 1999, Ch. 636, Sec. 6. Effective January 1, 2000. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69767.
  

The Treasurer shall invest, pursuant to statute, any surplus money in the Federal Student Loan Reserve Fund and the Student Loan Operating Fund. The interest or other accretions as a result of the investment of this money shall be deposited in the originating fund, and may be expended for those purposes authorized in this article or the Higher Education Act of 1965.

(Amended by Stats. 1999, Ch. 636, Sec. 7. Effective January 1, 2000. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69768.
  

(a) The funds in the Federal Student Loan Reserve Fund and the Student Loan Operating Fund shall be paid out by the State Treasurer on warrants drawn by the Controller, or through a transfer between the Federal Student Loan Reserve Fund and the Student Loan Operating Fund, and requisitioned by the commission in carrying out the purposes of this article and the federal act.

(b) The commission is hereby authorized to make advance payments from the Student Loan Operating Fund to the auxiliary organization for services rendered to the commission under Article 2.5 (commencing with Section 69522). The commission is hereby authorized to make advance payments from the Student Loan Operating Fund to the auxiliary organization for the purpose of providing funding necessary for other permitted student financial aid activities approved by the commission pursuant to a business plan adopted by the auxiliary organization and approved by the commission, provided the commission first provides the Director of Finance and the Joint Legislative Budget Committee with at least 45 days advance notice in writing that includes the amount proposed to be transferred and a description of the approved student financial aid activities and related expenditures to be undertaken. If the Director of Finance or the Joint Legislative Budget Committee notifies the commission regarding issues of concern with the proposed transfer of funds, the commission shall convene a meeting of appropriate representatives of the commission, the Department of Finance, and the Legislature to resolve those issues. Notwithstanding any other law, advance payments to the auxiliary organization and any fees charged by the auxiliary organization for services rendered to the commission pursuant to an operating agreement may be deposited with a private financial institution.

(Amended by Stats. 2004, Ch. 216, Sec. 21. Effective August 11, 2004. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69769.
  

The commission shall establish a Loan Advisory Council. The Loan Advisory Council shall be composed of 17 members, appointed by the commission, composed of representatives of students, postsecondary educational institutions, eligible lenders, and participating secondary markets.

(Amended by Stats. 1998, Ch. 954, Sec. 3. Effective January 1, 1999. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69769.3.
  

(a) The Loan Advisory Council established pursuant to Section 69769 shall be composed of members appointed from the following groups:

(1) Four representatives of the lending community participating in the Federal Family Education Loan Program.

(2) One representative each from the University of California, the California State University, the California Community Colleges, a private nonprofit postsecondary education institution, and a private for-profit postsecondary education institution.

(3) One representative from the California Association of Student Financial Aid Administrators.

(4) Five student representatives from the same postsecondary segments listed in paragraph (2). In no event shall a student representative be appointed to serve simultaneously as the representative of more than one of these five postsecondary groups.

(5) One representative from a secondary market participating in the Federal Family Education Loan Program.

(6) One representative from the California Lenders for Education Association.

(b) The representatives appointed by the commission pursuant to subdivision (a) shall be selected by the commission from lists provided to its chair by each group described in that subdivision.

(Amended by Stats. 1998, Ch. 954, Sec. 4. Effective January 1, 1999. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69769.4.
  

In addition to the members appointed to the Loan Advisory Council pursuant to Section 69769.3, the United States Department of Education may appoint one nonvoting representative to the council who shall serve as liaison between that department and the council.

(Amended by Stats. 1998, Ch. 954, Sec. 5. Effective January 1, 1999. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69769.5.
  

The Loan Advisory Council shall review the activities and policies of the Federal Family Education Loan Program and shall regularly advise the commission of its findings and recommendations. The Loan Advisory Council may request information and data that it deems appropriate from the Student Aid Commission with respect to the Federal Family Education Loan Program or any other loan program administered by the commission.

(Amended by Stats. 1998, Ch. 954, Sec. 6. Effective January 1, 1999. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69769.7.
  

(a) The Loan Advisory Council shall annually elect a chair and a vice chair from its membership. Representatives who serve on, or are employed or retained by, the commission, and the nonvoting representative appointed by the United States Department of Education, if any, are ineligible for election to these positions.

(b) The chair of the Loan Advisory Council shall have the authority, in consultation with the chair of the commission, to convene meetings of the council. The chair shall also direct each council meeting and shall regularly present oral and written reports to the commission regarding the advice of the council. The vice chair of the Loan Advisory Council shall assume these responsibilities in the absence of the chair.

(Amended by Stats. 1998, Ch. 954, Sec. 7. Effective January 1, 1999. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69771.
  

This article shall be applicable to the extent that its provisions do not conflict with Title IV of the Higher Education Act of 1965, or any extensions thereof, or any similar act of Congress, and the rules and regulations adopted thereunder.

(Amended by Stats. 1989, Ch. 1113, Sec. 38.3. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69772.
  

The commission shall annually report on the numbers of students participating in the program, total loan volume, and the postsecondary educational institutions in which participating students are enrolled.

(Amended by Stats. 1994, Ch. 485, Sec. 9. Effective January 1, 1995. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69774.
  

(a) The commission shall provide, with each application form for the Federal Family Education Loan Program a notice to the student informing him or her that, for purposes of collecting on a defaulted loan, the commission is entitled to seek employment, wage, and other information from the Employment Development Department on any person who defaults on a guaranteed student loan.

(b) A common application form may be utilized for student loans in compliance with the program eligibility and financial forms specified in Section 69534.1.

(Amended by Stats. 1994, Ch. 485, Sec. 10. Effective January 1, 1995. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69775.
  

The commission shall develop and distribute in cooperation with postsecondary educational institutions and private lenders, simple, common consumer information for prospective student borrowers.

(Amended by Stats. 1981, Ch. 847, Sec. 8. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69776.
  

The commission may contract for all or part of administrative support services.

(Added by Stats. 1977, Ch. 1201. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69776.5.
  

The commission may enter into contracts with a public agency or a private entity to improve the processing and distribution of guaranteed student loan applications through the use of electronic networks and unified data bases.

(Added by Stats. 1984, Ch. 501, Sec. 3. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69777.
  

The commission shall encourage private lenders to increase participation in the guaranteed student loan program.

(Added by Stats. 1977, Ch. 1201. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

69779.
  

The General Fund shall not be liable for any student loan made prior to the effective date of the chapter which enacts this section.

(Added by Stats. 1977, Ch. 1201. Repealed conditionally by Stats. 2007, Ch. 184, Secs. 2 and 4.)

EDCEducation Code - EDC13.