HF 3181

as introduced - 88th Legislature (2013 - 2014) Posted on 03/19/2014 12:12pm

A bill for an act
relating to higher education; making various policy, clarifying, and technical
changes to provisions related to state student aid, student loan programs,
scholarships, and other higher education-related provisions; authorizing
incentive gifts; authorizing the Office of Higher Education to refinance student
loans in certain situations; amending Minnesota Statutes 2012, sections
16C.075; 136A.01, by adding a subdivision; 136A.103; 136A.16, subdivision
2; 136A.1701, subdivisions 4, 7, 12; 136A.1702; 136A.1785; proposing
coding for new law in Minnesota Statutes, chapter 136A; repealing Minnesota
Statutes 2012, section 136A.127, subdivisions 1, 2, 3, 4, 6, 7, 9, 9b, 10, 10a,
11; Minnesota Statutes 2013 Supplement, section 136A.127, subdivisions 5,
14; Minnesota Rules, parts 4830.0120; 4830.0130; 4830.0140; 4830.0150;
4830.0160; 4830.0170; 4830.0180; 4830.0190; 4830.0195; 4850.0010;
4850.0011, subparts 1, 2, 4, 5, 6, 8, 9, 10, 11, 11a, 12, 12a, 13, 14, 15, 16, 17,
18, 19, 20, 21, 22, 23, 24, 24a, 25, 26, 26a, 28a, 28b, 28c, 28d, 28e, 28f, 29,
30; 4850.0012; 4850.0014; 4850.0015; 4850.0016; 4850.0017; 4850.0018;
4850.0020; 4850.0021; 4850.0022; 4850.0024.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2012, section 16C.075, is amended to read:

16C.075 E-VERIFY.

A contract for services valued in excess of $50,000 must require certification from
the vendor and any subcontractors that, as of the date services on behalf of the state of
Minnesota will be performed, the vendor and all subcontractors have implemented or
are in the process of implementing the federal E-Verify program for all newly hired
employees in the United States who will perform work on behalf of the state of Minnesota.
This section does not apply to contracts entered into by the State Board of Investment new text begin or
contracts entered into by the Office of Higher Education that are related to processing,
servicing, and collecting on student loans new text end .

Sec. 2.

Minnesota Statutes 2012, section 136A.01, is amended by adding a subdivision
to read:

new text begin Subd. 3. new text end

new text begin Incentive programs. new text end

new text begin The commissioner is authorized to utilize incentive
gifts including, but not limited to, gift cards in order to promote to the public the various
programs administered by the office. The annual total expenditures for such incentive
programs shall not exceed $25,000.
new text end

Sec. 3.

Minnesota Statutes 2012, section 136A.103, is amended to read:

136A.103 INSTITUTION ELIGIBILITY REQUIREMENTS.

(a) A postsecondary institution is eligible for state student aid under chapter 136A
and sections 197.791 and 299A.45, if the institution is located in this state and:

(1) is operated by this state or the Board of Regents of the University of Minnesota; or

(2) is operated privately and, as determined by the office, meets the requirements of
paragraph (b).

(b) A private institution must:

(1) maintain academic standards substantially equivalent to those of comparable
institutions operated in this state;

(2) be licensed or registered as a postsecondary institution by the office; and

(3)(i) by July 1, 2010, participate in the federal Pell Grant program under Title IV of
the Higher Education Act of 1965, Public Law 89-329, as amended; or

(ii) if an institution was participating in state student aid programs as of June 30, 2010,
and the institution did not participate in the federal Pell Grant program by June 30, 2010,
the institution must require every student who enrolls to sign a disclosure form, provided by
the office, stating that the institution is not participating in the federal Pell Grant program.

(c) An institution that offers only graduate-level degrees or graduate-level nondegree
programs deleted text begin , or that offers only degrees or programs that do not meet the required minimum
program length to participate in the federal Pell Grant program, deleted text end is an eligible institution if
the institution is licensed or registered as a postsecondary institution by the office.

(d) An eligible institution under paragraph (b), clause (3), item (ii), that changes
ownership as defined in section 136A.63, subdivision 2, must participate in the federal
Pell Grant program within four calendar years of the first ownership change to continue
eligibility.

(e) An institution that loses its eligibility for the federal Pell Grant program is not an
eligible institution.

Sec. 4.

new text begin [136A.104] INSTITUTION TERMINATION.
new text end

new text begin The office may terminate a postsecondary institution's eligibility to participate in
state student aid programs if the institution meets any of the following criteria:
new text end

new text begin (1) it violates a provision of Minnesota Statutes, Minnesota Rules, or administrative
policies governing student aid programs and fails to correct the violation and reimburse
the office for audit findings within the time frame specified in the audit report or other
notice furnished by the office;
new text end

new text begin (2) it has a consistent pattern of noncompliance with Minnesota Statutes, Minnesota
Rules, or administrative policies governing student aid programs as documented by the
office or lacks administrative capability to successfully administer student financial aid
programs on campus based on factors including, but not limited to:
new text end

new text begin (i) adequacy of financial aid staffing levels, experience, training, and turnover of key
financial aid staff;
new text end

new text begin (ii) adequate checks and balances in its system of internal controls;
new text end

new text begin (iii) maintenance of records required for programs; or
new text end

new text begin (iv) the ability to participate in the electronic processes used for program
administration;
new text end

new text begin (3) it refuses to allow inspection of or provide information relating to financial aid
records after written request by the office;
new text end

new text begin (4) it misappropriates student aid program money;
new text end

new text begin (5) it falsifies information or engages in misleading or deceptive practices involving
the administration of student financial aid programs;
new text end

new text begin (6) it no longer meets institutional eligibility criteria in section 136A.101,
subdivision 4, or additional criteria for state grant participation in Minnesota Rules, part
4830.0300, subparts 1 and 2; or
new text end

new text begin (7) it is terminated from participating in federal financial aid programs by the
United State Department of Education, if the termination was based on violation of laws,
regulations, or participation agreements governing federal financial aid programs.
new text end

Sec. 5.

new text begin [136A.1041] TERMINATION PROCEDURE.
new text end

new text begin The office shall provide written notice of its intent to terminate an institution's
eligibility to participate in student financial aid programs if the institution meets any of
the criteria for termination in section 136A.104. The office shall send the institution
written notification of the termination, which is effective 90 days after the date of the
written notification. The office shall also provide an institution an opportunity for a
hearing under chapter 14.
new text end

Sec. 6.

new text begin [136A.1042] REQUEST FOR HEARING.
new text end

new text begin An institution may request a hearing under chapter 14 regarding its termination of
eligibility to participate in a student aid program. The request must be in writing and must
be received by the commissioner within 30 days after the date of the written notification of
termination sent by the office. Within ten days after receipt of the request for hearing, the
office shall contact the Office of Administrative Hearings to arrange a hearing date.
new text end

Sec. 7.

new text begin [136A.1043] RESTRICTION ON AWARDS DURING TERMINATION
PERIOD.
new text end

new text begin After the notice of termination and until the termination becomes effective, the
office reserves the right to withhold further financial aid disbursements to the institution.
During this period, the institution may not make any new awards to students but may use
any remaining student aid program money on campus to make disbursements to any
students awarded money before the notice of termination.
new text end

Sec. 8.

new text begin [136A.1044] FINAL DECISION; ORDERS.
new text end

new text begin The commissioner shall render a decision and order in writing following receipt of
the report issued by the administrative law judge after the hearing. The final decision
of the commissioner shall take into consideration the hearing record and the report of
the administrative law judge. The order of the commissioner is the final decision in
the termination of the institution's eligibility to participate in a student aid program
administered by the office.
new text end

Sec. 9.

new text begin [136A.1045] REINSTATEMENT OF ELIGIBILITY.
new text end

new text begin An institution terminated from participating in student financial aid programs
may submit a request for reinstatement of eligibility. The institution must wait at least
12 consecutive months after the effective date of the termination to submit a request
for reinstatement. A request for reinstatement must be in writing and submitted to the
commissioner. If the institution is initially denied reinstatement, the institution must
wait at least 90 days after the date of denial of reinstatement to resubmit a request for
reinstatement. If an institution's eligibility is reinstated after the start of the academic
term, eligible students shall receive payment retroactively to the beginning of the term
during which the institution was reinstated.
new text end

Sec. 10.

new text begin [136A.1046] REINSTATEMENT REQUIREMENTS.
new text end

new text begin An institution's reinstatement request must include:
new text end

new text begin (1) written documentation specifying changes the institution has made to
successfully address the reasons for termination, as outlined in the termination notice;
new text end

new text begin (2) permission for the office's staff to conduct a reinstatement audit and to evaluate
systems put in place to address the reasons for termination;
new text end

new text begin (3) evidence of full repayment to the office of student aid program money the
institution improperly received, withheld, disbursed, or caused to be disbursed;
new text end

new text begin (4) new participation agreements with the office for all student aid programs in
which the institution wishes to participate; and
new text end

new text begin (5) if applicable, documentation of the institution's eligibility to participate in
federal financial aid programs.
new text end

Sec. 11.

new text begin [136A.1047] RESPONSE TO REINSTATEMENT REQUEST.
new text end

new text begin Within 60 days after receiving the institution's reinstatement request, the office shall
conduct a reinstatement audit and either:
new text end

new text begin (1) place the institution on probationary status for a period of one year; or
new text end

new text begin (2) deny the request based on the institution meeting one or more of the termination
criteria in section 136A.104.
new text end

Sec. 12.

new text begin [136A.1048] PROBATIONARY PERIOD.
new text end

new text begin During the probationary period, the office may audit the institution's records
without notice. If, while on probation, the institution violates a condition under section
136A.104, documented by the office's audit staff, the office must remove the institution
from probationary status and deny the request for reinstatement. If the institution fails to
successfully complete the probationary period, termination is final and effective within 30
days after written notice of the denial of the reinstatement request.
new text end

Sec. 13.

new text begin [136A.1049] REINSTATEMENT.
new text end

new text begin If an institution no longer violates a condition under section 136A.104 and
successfully completes the probationary period, the office must reinstate the institution's
eligibility to participate in student financial aid programs effective the last date of the
probationary period.
new text end

Sec. 14.

new text begin [136A.105] STUDENT AWARDS AFTER TERMINATION.
new text end

new text begin If an institution is terminated from participating in student financial aid programs
during a payment period, and a student at the institution was eligible for an award other
than a student educational loan fund loan before the effective date of the institution's
termination, the office must issue a payment for that payment period, as long as the student
will not receive a payment for the same payment period from another institution and the
student continues to meet the program's eligibility requirements.
new text end

Sec. 15.

Minnesota Statutes 2012, section 136A.16, subdivision 2, is amended to read:

Subd. 2.

Rules.

The office deleted text begin shall deleted text end new text begin may new text end adopt policies and prescribe appropriate rules
to carry out the purposes of sections 136A.15 to 136A.1702. deleted text begin The policies and rules except
as they relate to loans under section 136A.1701 must be compatible with the provisions of
the National Vocational Student Loan Insurance Act of 1965 and the provisions of title IV
of the Higher Education Act of 1965, and any amendments thereof.
deleted text end

Sec. 16.

Minnesota Statutes 2012, section 136A.1701, subdivision 4, is amended to
read:

Subd. 4.

Terms and conditions of loans.

deleted text begin (a) deleted text end The office may loan money upon
such terms and conditions as the office deleted text begin may prescribe. Under the SELF IV program, the
principal amount of a loan to an undergraduate student for a single academic year shall not
exceed $7,500 per grade level. The aggregate principal amount of all loans made subject
to this paragraph to an undergraduate student shall not exceed $37,500. The principal
amount of a loan to a graduate student for a single academic year shall not exceed $9,000.
The aggregate principal amount of all loans made subject to this paragraph to a student as
an undergraduate and graduate student shall not exceed $55,500. The amount of the loan
may not exceed the cost of attendance less all other financial aid, including PLUS loans or
other similar parent loans borrowed on the student's behalf. The cumulative SELF loan
debt must not exceed the borrowing maximums in paragraph (b) deleted text end new text begin prescribes new text end .

deleted text begin (b) The cumulative undergraduate borrowing maximums for SELF IV loans are:
deleted text end

deleted text begin (1) grade level 1, $7,500;
deleted text end

deleted text begin (2) grade level 2, $15,000;
deleted text end

deleted text begin (3) grade level 3, $22,500;
deleted text end

deleted text begin (4) grade level 4, $30,000; and
deleted text end

deleted text begin (5) grade level 5, $37,500.
deleted text end

deleted text begin (c) The principal amount of a SELF V or subsequent phase loan to students enrolled
in a bachelor's degree program, postbaccalaureate, or graduate program must not exceed
$10,000 per grade level. For all other eligible students, the principal amount of the loan
must not exceed $7,500 per grade level. The aggregate principal amount of all loans made
subject to this paragraph to a student as an undergraduate and graduate student must not
exceed $70,000. The amount of the loan must not exceed the cost of attendance less
all other financial aid, including PLUS loans or other similar parent loans borrowed on
the student's behalf. The cumulative SELF loan debt must not exceed the borrowing
maximums in paragraph (d).
deleted text end

deleted text begin (d)(1) The cumulative borrowing maximums for SELF V loans and subsequent phases
for students enrolled in a bachelor's degree program or postbaccalaureate program are:
deleted text end

deleted text begin (i) grade level 1, $10,000;
deleted text end

deleted text begin (ii) grade level 2, $20,000;
deleted text end

deleted text begin (iii) grade level 3, $30,000;
deleted text end

deleted text begin (iv) grade level 4, $40,000; and
deleted text end

deleted text begin (v) grade level 5, $50,000.
deleted text end

deleted text begin (2) For graduate level students, the borrowing limit is $10,000 per nine-month
academic year, with a cumulative maximum for all SELF debt of $70,000.
deleted text end

deleted text begin (3) For all other eligible students, the cumulative borrowing maximums for SELF V
loans and subsequent phases are:
deleted text end

deleted text begin (i) grade level 1, $7,500;
deleted text end

deleted text begin (ii) grade level 2, $15,000;
deleted text end

deleted text begin (iii) grade level 3, $22,500;
deleted text end

deleted text begin (iv) grade level 4, $30,000; and
deleted text end

deleted text begin (v) grade level 5, $37,500.
deleted text end

Sec. 17.

Minnesota Statutes 2012, section 136A.1701, subdivision 7, is amended to
read:

Subd. 7.

Repayment of loans.

deleted text begin (a) deleted text end The office shall establish repayment procedures
for loans made under this section deleted text begin , but in no event shall the period of permitted repayment
for SELF II or SELF III loans exceed ten years from the eligible student's termination of
the student's postsecondary academic or vocational program, or 15 years from the date of
the student's first loan under this section, whichever is less deleted text end .

deleted text begin (b) For SELF IV loans, eligible students with aggregate principal loan balances from
all SELF phases that are less than $18,750 shall have a repayment period not exceeding
ten years from the eligible student's graduation or termination date. For SELF IV loans,
eligible students with aggregate principal loan balances from all SELF phases of $18,750
or greater shall have a repayment period not exceeding 15 years from the eligible student's
graduation or termination date. For SELF IV loans, the loans shall enter repayment no
later than seven years after the first disbursement date on the loan.
deleted text end

deleted text begin (c) For SELF loans from phases after SELF IV, eligible students with aggregate
principal loan balances from all SELF phases that are:
deleted text end

deleted text begin (1) less than $20,000, must have a repayment period not exceeding ten years from
the eligible student's graduation or termination date;
deleted text end

deleted text begin (2) $20,000 up to $40,000, must have a repayment period not exceeding 15 years
from the eligible student's graduation or termination date; and
deleted text end

deleted text begin (3) $40,000 or greater, must have a repayment period not exceeding 20 years
from the eligible student's graduation or termination date. For SELF loans from phases
after SELF IV, the loans must enter repayment no later than nine years after the first
disbursement date of the loan.
deleted text end

Sec. 18.

Minnesota Statutes 2012, section 136A.1701, subdivision 12, is amended to
read:

Subd. 12.

Eligible student.

new text begin (a) new text end "Eligible student" means a student who is a
Minnesota resident who is enrolled or accepted for enrollment at an eligible institution in
Minnesota or in another state or province. Non-Minnesota residents are eligible students if
they are enrolled or accepted for enrollment in a minimum of one course of at least 30
days in length during the academic year that requires physical attendance at an eligible
institution located in Minnesota. Non-Minnesota resident students enrolled exclusively
during the academic year in correspondence courses or courses offered over the Internet
are not eligible students. Non-Minnesota resident students not physically attending classes
in Minnesota due to enrollment in a study abroad program for 12 months or less are
eligible students. Non-Minnesota residents enrolled in study abroad programs exceeding
12 months are not eligible students. For purposes of this section, an "eligible student"
must also meet the eligibility requirements of section 136A.15, subdivision 8.

new text begin (b) An eligible student is required to have a creditworthy cosigner.
new text end

Sec. 19.

Minnesota Statutes 2012, section 136A.1702, is amended to read:

136A.1702 LEGISLATIVE OVERSIGHT.

new text begin Subdivision 1. new text end

new text begin State Student Loan Legislative Advisory Board. new text end

deleted text begin The office shall
notify the chairs of the legislative committees with primary jurisdiction over higher
education finance of any proposed material change to any of its student loan programs
prior to making the change. deleted text end new text begin A state Student Loan Legislative Advisory Board is
established to review material changes to the terms and conditions of state student loans.
new text end

new text begin Subd. 2. new text end

new text begin Members. new text end

new text begin The members of the advisory board are the chairs and ranking
minority members of legislative committees with primary jurisdiction over higher
education finance or their designees.
new text end

new text begin Subd. 3. new text end

new text begin Notification. new text end

new text begin Before making a material change to the state student loan
programs, the office must submit the proposed change to:
new text end

new text begin (1) the commissioner of management and budget for review and approval; and
new text end

new text begin (2) the state Student Loan Legislative Advisory Board for its recommendation. A
recommendation under this clause is advisory only.
new text end

Sec. 20.

new text begin [136A.1704] STUDENT LOAN REFINANCING.
new text end

new text begin Subdivision 1. new text end

new text begin Refinancing loans. new text end

new text begin In order to provide borrowers who have
education loans options to help manage loan repayment, the office may refinance student
and parent loans. The terms and conditions of the loans shall include, but are not limited to:
new text end

new text begin (1) residency requirements;
new text end

new text begin (2) borrower and cosigner credit criteria;
new text end

new text begin (3) interest rates; and
new text end

new text begin (4) limits on the maximum amount to be refinanced.
new text end

new text begin Subd. 2. new text end

new text begin Source of funding. new text end

new text begin The loans refinanced under this section shall be funded
by the loan capital fund under section 136A.1785.
new text end

new text begin Subd. 3. new text end

new text begin Oversight. new text end

new text begin (a) The office must submit its student loan refinancing
plan to the commissioner of management and budget for review and approval prior to
implementation of:
new text end

new text begin (1) the refinancing program; or
new text end

new text begin (2) making a material change to the refinancing program.
new text end

new text begin (b) The office must submit its student loan refinancing plan to the state Student Loan
Legislative Advisory Board prior to implementation of:
new text end

new text begin (1) the refinancing program; or
new text end

new text begin (2) making a material change to the refinancing program.
new text end

Sec. 21.

Minnesota Statutes 2012, section 136A.1785, is amended to read:

136A.1785 LOAN CAPITAL FUND.

The office may deposit and hold assets derived from the operation of its student loan
programs new text begin and refinanced education loans new text end authorized by this chapter in a fund known as
the loan capital fund. Assets in the loan capital fund are available to the office solely
for carrying out the purposes and terms of sections 136A.15 to deleted text begin 136A.1703 deleted text end new text begin 136A.1704 new text end ,
including, but not limited to, making student loans authorized by this chapter, new text begin refinancing
education loans authorized by this chapter, new text end paying administrative expenses associated with
the operation of its student loan programs, repurchasing defaulted student loans, and
paying expenses in connection with the issuance of revenue bonds authorized under this
chapter. Assets in the loan capital fund may be invested as provided in sections 11A.24
and 136A.16, subdivision 8. All interest and earnings from the investment of the loan
capital fund inure to the benefit of the fund and are deposited into the fund.

Sec. 22. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2012, section 136A.127, subdivisions 1, 2, 3, 4, 6, 7, 9, 9b,
10, 10a, and 11, new text end new text begin and new text end new text begin Minnesota Statutes 2013 Supplement, section 136A.127, subdivisions
5 and 14, new text end new text begin are repealed.
new text end

new text begin (b) new text end new text begin Minnesota Rules, parts 4830.0120; 4830.0130; 4830.0140; 4830.0150;
4830.0160; 4830.0170; 4830.0180; 4830.0190; 4830.0195; 4850.0010; 4850.0011,
subparts 1, 2, 4, 5, 6, 8, 9, 10, 11, 11a, 12, 12a, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23,
24, 24a, 25, 26, 26a, 28a, 28b, 28c, 28d, 28e, 28f, 29, and 30; 4850.0012; 4850.0014;
4850.0015; 4850.0016; 4850.0017; 4850.0018; 4850.0020; 4850.0021; 4850.0022; and
4850.0024, new text end new text begin are repealed.
new text end