PRINTER'S NO. 1062
No. 822 Session of 2005
INTRODUCED BY WONDERLING, MELLOW, MUSTO, D. WHITE AND FONTANA,
JULY 2, 2005
REFERRED TO EDUCATION, JULY 2, 2005
AN ACT
1 Amending the act of August 7, 1963 (P.L.549, No.290), entitled,
2 as amended, "An act creating the Pennsylvania Higher
3 Education Assistance Agency; defining its powers and duties;
4 conferring powers and imposing duties on the Governor,
5 President Pro Tempore of the Senate, Speaker of the House of
6 Representatives, Superintendent of Public Instruction and the
7 Department of Auditor General; and making appropriations,"
8 further providing for powers and duties of the Pennsylvania
9 Higher Education Assistance Agency; and providing for the
10 transfer of certain powers, duties and functions from the
11 agency to the Department of Education and for related
12 transitional provisions.
13 The General Assembly of the Commonwealth of Pennsylvania
14 hereby enacts as follows:
15 Section 1. Section 4 introductory paragraph, (1.1), (1.3)
16 and (2) of the act of August 7, 1963 (P.L.549, No.290), referred
17 to as the Pennsylvania Higher Education Assistance Agency Act,
18 amended December 29, 1982 (P.L.1450, No.330), are amended and
19 the section is amended by adding a subsection to read:
20 Section 4. Powers and Duties.--(a) In furtherance of the
21 purposes set forth in this act, the board of directors shall
22 have the following powers:
1 * * *
2 (1.1) As a public corporation and body politic subject to
3 examination by the Auditor General of the Commonwealth, the
4 agency shall be deemed an "eligible lender" as defined in [Part
5 B of Title IV of the Federal] section 435 of the Higher
6 Education Act of 1965 (Public Law 89-329, 20 U.S.C. § 1085) and
7 in [Part C] section 737 of the Health Professions Educational
8 Assistance Act of 1976 (Public Law 94-484, 90 Stat. 2265) and,
9 pursuant to the provisions of those acts and any subsequent
10 amendments thereto or other applicable Federal programs, be
11 entitled to exercise all the authority, rights and privileges of
12 an "eligible lender." Such authority, rights and privileges
13 shall include but not be limited to the following:
14 (i) To do whatever is necessary to enable students who are
15 parties to loans made, funded or guaranteed under this act to
16 qualify for Federal interest subsidy, special allowance, loan
17 forgiveness or other applicable benefits.
18 (ii) To charge and collect premiums for insurance on loans
19 and other appropriate charges and pay such insurance premiums or
20 a portion thereof and other charges as are appropriate or
21 required by applicable Federal statutes or agreements.
22 (iii) To enter into contracts with schools, lenders,
23 individuals, corporations, the Student Loan Marketing
24 Association, other agencies of the Commonwealth, other states
25 and the Federal Government to make, service, invest in,
26 purchase, make commitments to purchase, take assignments of or
27 administer loans made or insured under this act, the Health
28 Professions Educational Assistance Act of 1976, or other
29 programs approved by the board of directors and to provide for
30 loan forgiveness, loan consolidation, loan referral service and
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1 graduated repayment. Loans to lenders or postsecondary
2 institutions made under this clause may be made under terms and
3 conditions requiring that the funds so loaned be used for the
4 making of loans to categories of students as defined and
5 established by the board[.], provided that all fees and other
6 charges and terms of such loans are charged and offered on a
7 uniform basis and in a manner that does not discriminate against
8 or advantage any particular lender or group of lenders. Any such
9 contract of the agency to service student loans shall not be
10 subject to the provisions of the act of June 21, 1957 (P.L.390,
11 No.212), referred to as the Right-to-Know Law. For purposes of
12 this clause, contract shall include schedules or exhibits
13 relating to pricing or schedules relating to equipment, time
14 charges, service charges or other charges pertinent to an agency
15 contract to service student loans. Any citizen of the
16 Commonwealth of Pennsylvania who desires to examine, inspect or
17 copy any such contract shall apply to the Attorney General. Upon
18 receipt of any such application, the Attorney General shall
19 cause a review of the contract to determine if the disclosure of
20 the contents of the contract could cause a loss of revenue to
21 any Commonwealth fund or to the agency. If the Attorney General
22 determines that it is unlikely that a loss of revenue to any
23 Commonwealth fund or the agency could occur, the Attorney
24 General may grant the application and order the agency to permit
25 the citizen to examine, inspect or copy the contract. Otherwise,
26 the Attorney General shall deny the application. The Attorney
27 General shall also have the power to determine that portions of
28 the contract may be examined, inspected or copied and other
29 portions may not. The agency may adopt and enforce reasonable
30 rules, subject to the approval of the Attorney General,
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1 governing the examination, inspection or copying of any such
2 contracts. The Attorney General shall make a determination for
3 any application within thirty days of receipt thereof.
4 (iv) To purchase stocks, securities, and the obligations
5 issued by the Student Loan Marketing Association, and to use its
6 insured and other student loans as security for loans and other
7 forms of advances from the Student Loan Marketing Association or
8 others, including lenders and postsecondary institutions
9 participating or investing in loans made under this act.
10 (v) To be issued certificates of loan insurance as set forth
11 in section 732, Part C, Title IV of the Health Professions
12 Educational Assistance Act of 1976 or other appropriate Federal
13 legislation.
14 * * *
15 [(1.3) To establish annually the award of the "assistance
16 grant" in the act of July 18, 1974 (P.L.483, No.174), known as
17 "The Institutional Assistance Grants Act" by dividing the total
18 amount annually appropriated to the "agency" pursuant to that
19 act by the number of "Pennsylvania State scholarship students"
20 certified to the "agency" pursuant to that act.]
21 (2) To pay costs and fees incurred by lenders and others in
22 making loans, advancing funds representing loans issued through
23 a line of credit advanced by the agency or the lender and
24 performing other functions on behalf of the agency[.], provided
25 that payment of such costs and fees are offered to all lenders
26 on a uniform basis and in a manner that does not discriminate
27 against or advantage any particular lender or group of lenders.
28 * * *
29 (b) Notwithstanding any other provision of this act to the
30 contrary, in connection with the exercise of the powers
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1 specified in this section:
2 (1) With regard to any lender that originates, in any given
3 academic year, a minimum of one million dollars ($1,000,000) of
4 student loans originated under the Federal Family Education Loan
5 Program pursuant to Part B of Title IV of the Higher Education
6 Act of 1965 (Public Law 89-329, 20 U.S.C. § 1071 et seq.) at
7 Pennsylvania postsecondary institutions, the board of directors,
8 upon request of the lender, shall cause the agency to provide
9 guaranty, origination, disbursement, collection, systems support
10 and related services and provide the lender with access to the
11 agency's network operating systems, in a manner that does not
12 discriminate against or advantage any such lender and at rates
13 and upon terms and conditions that are the same for all such
14 lenders, regardless of whether a lender participates in or
15 otherwise contracts with the agency for any program or product
16 offered or administered by the agency.
17 (2) The board of directors shall not use, without good
18 cause, its audit or investigatory powers in a manner that
19 subjects a lender or postsecondary institution to audits or
20 investigations that are more stringent or more frequently
21 conducted than audits or investigations conducted for any other
22 postsecondary institution or lender.
23 Section 2. The act is amended by adding a section to read:
24 Section 10.1. Transfer of Powers, Duties and Functions to
25 Department of Education; Transitional Provisions.--(a)
26 Notwithstanding any other provision of this act or other law to
27 the contrary:
28 (1) Except as otherwise provided in paragraph (9), the
29 powers and duties of the agency set forth in the following acts
30 shall be transferred to the Department of Education:
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1 (i) The act of January 25, 1965 (1966 P.L.1546, No.541),
2 referred to as the Higher Education Scholarship Law.
3 (ii) The act of October 11, 1972 (P.L.899, No.213), entitled
4 "An act providing scholarships for certain dependents of members
5 of the armed services who while on active duty are taken as
6 prisoners of war or are reported missing in action and making an
7 appropriation."
8 (iii) The act of October 11, 1972 (P.L.909, No.216), known
9 as the Veterans' Education Act of 1971.
10 (iv) The act of July 18, 1974 (P.L.483, No.174), known as
11 The Institutional Assistance Grants Act.
12 (v) The act of December 16, 1988 (P.L.1259, No.155), known
13 as the Urban and Rural Teacher Loan Forgiveness Act.
14 (vi) The act of June 26, 1992 (P.L.322, No.64), known as the
15 Agriculture Education Loan Forgiveness Act.
16 (2) The State scholarship program established under the
17 Higher Education Scholarship Law shall be funded jointly by the
18 Commonwealth and the agency and shall be known as the
19 Legislative Education Assistance Program.
20 (3) The grants established under the Higher Education
21 Scholarship Law shall be known as Legislative Education
22 Assistance Program grants.
23 (4) The institutional assistance grants defined and
24 established under The Institutional Assistance Grants Act shall
25 be known as Legislative School Assistance grants.
26 (5) The assistance grant fund and Institutional Assistance
27 Grant Fund defined and referred to under The Institutional
28 Assistance Grants Act shall be known as the Legislative School
29 Assistance Grant Fund.
30 (6) All retained earnings of the agency in any fiscal year
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1 shall be utilized in the following manner:
2 (i) The sum of sixteen million dollars ($16,000,000)
3 annually shall be remitted by the agency to the Department of
4 Education for administration of the Legislative Education
5 Assistance Program grants and the Legislative School Assistance
6 Program grants. Any amount not utilized by the Department of
7 Education for administration of these programs shall be used to
8 provide additional grants and scholarships.
9 (ii) Annually, all remaining net income of the agency shall
10 be transferred to the Department of Education for use in the
11 Legislative Education Assistance Program grants and the
12 Legislative School Assistance Program grants, subject to
13 formulae established by the General Assembly.
14 (iii) Annually, the agency shall submit an audit of all of
15 its revenues and expenses to the General Assembly for approval,
16 and to further provide for a determination of the amount of
17 funding to be remitted to the Department of Education. This
18 audit shall be conducted by the Auditor General, or another
19 entity that the General Assembly shall deem appropriate, and
20 designated by resolution within a time frame set forth by the
21 General Assembly for the purpose of appropriation of these grant
22 funds as provided in this act.
23 (7) The agency shall, at the request of the Department of
24 Education, enter into an agreement whereby the agency shall
25 provide support to and otherwise administer for the Department
26 of Education in connection with the Department of Education's
27 administration of the Legislative Education Assistance Program
28 and the Legislative School Assistance Program identified in this
29 section. The agency may charge the Department of Education a
30 reasonable fee, not to exceed market rates for the performance
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1 of such administrative services and support. Whether or not the
2 Department of Education engages the agency for support and
3 administrative services, the agency shall make available, to the
4 Department of Education, on a timely basis, the systems of the
5 agency installed or utilized at each eligible institution. These
6 services shall be provided by the agency to the Department of
7 Education for a reasonable fee not to exceed customary fees
8 charged in the student loan industry for the performance of such
9 activities to the Department of Education.
10 (8) All Pennsylvania postsecondary institutions shall have
11 access to the agency's data on grant programs and related
12 information, at the same time and under the same terms and
13 conditions as any other similarly situated school in
14 Pennsylvania regardless of whether or not such institution
15 participates in or otherwise contracts with the agency for any
16 program or product offered or administered by the agency.
17 (9) The agency and the Department of Education shall jointly
18 have the power to deny all financial assistance to any student
19 as set forth under section 8.2(a) of the Higher Education
20 Scholarship Law.
21 (10) The Department of Education may contract with one or
22 more private entities in order to assist the Department of
23 Education in fulfilling its duties under The Institutional
24 Assistance Grants Act and the administration of the Legislative
25 Education Assistance Program and the Legislative School
26 Assistance Program.
27 (11) The Department of Education may contract with the
28 agency for systems support and related services and for access
29 to such agency's network operating systems and other technical
30 and administrative assistance for a reasonable fee not to exceed
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1 customary fees charged in the student loan industry for the
2 performance of such functions, in connection with the
3 administration of the Legislative Education Assistance Program
4 and the Legislative School Assistance Program.
5 (b) All operating costs that the agency incurs as a result
6 of the powers, duties and functions transferred to the
7 Department of Education under this section shall continue to be
8 paid from funds transferred from the agency to the Department of
9 Education for that purpose. The agency and the Department of
10 Education shall enter into an interagency agreement for the
11 transfer of such funds, which agreement shall include a funding
12 maintenance of effort requirement.
13 (c) The agency shall transfer all records, documents and
14 information necessary for the Department of Education to perform
15 the powers, duties and functions transferred under this section.
16 Section 3. The provisions of this act are severable. If any
17 provision of this act or its application to any person or
18 circumstance is held invalid, the invalidity shall not affect
19 other provisions or applications of this act which can be given
20 effect without the invalid provision or application.
21 Section 4. All acts and parts of acts are repealed insofar
22 as they are inconsistent with this act.
23 Section 5. This act shall take effect in 60 days.
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