Bill Text: IA HF2244 | 2015-2016 | 86th General Assembly | Introduced

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Bill Title: A bill for an act relating to interest rate limitations and disclosure requirements applicable to specified postsecondary educational loans, and making civil penalties applicable.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2016-02-11 - Introduced, referred to Commerce. H.J. 210. [HF2244 Detail]

Download: Iowa-2015-HF2244-Introduced.html

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House File 2244 - Introduced




                                 HOUSE FILE       
                                 BY  WINCKLER

                                      A BILL FOR

  1 An Act relating to interest rate limitations and disclosure
  2    requirements applicable to specified postsecondary
  3    educational loans, and making civil penalties applicable.
  4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN



  1  1    Section 1.  NEW SECTION.  261F.5A  Interest rates ==
  1  2 limitation.
  1  3    1.  For purposes of this section, "federal student loan
  1  4 interest rate" means the interest rate applied to an educational
  1  5 loan made, insured, or guaranteed under Tit. IV of the federal
  1  6 Higher Education Act of 1965, as amended, directly to a
  1  7 borrower solely for educational purposes and as described by
  1  8 the federal student aid office of the United States department
  1  9 of education.
  1 10    2.  a.  Notwithstanding any provision to the contrary, the
  1 11 interest rate collected or imposed by a lender or lending
  1 12 institution on a private educational loan in this state shall
  1 13 not be more than one percentage point over the corresponding
  1 14 federal student loan interest rate for the life of the loan.
  1 15    b.  For purposes of determining the applicable corresponding
  1 16 federal student loan interest rate, the lender or lending
  1 17 institution shall apply the current federal interest rate that
  1 18 corresponds to the category of the loan, including but not
  1 19 limited to whether the loan is subsidized or unsubsidized, and
  1 20 the category of the borrower, including but not limited to
  1 21 whether the borrower is an undergraduate or graduate student.
  1 22    3.  This section shall not be interpreted to supersede,
  1 23 conflict with, or apply to the requirements applicable to
  1 24 a loan that is made, insured, or guaranteed by the federal
  1 25 government or to any other loan providing for postsecondary
  1 26 educational expenses pursuant to a federal program.
  1 27    Sec. 2.  Section 261F.7, Code 2016, is amended to read as
  1 28 follows:
  1 29    261F.7  Disclosure requirements.
  1 30    1.  Except for educational loans made, insured, or
  1 31 guaranteed by the federal government, a lending institution
  1 32 included on a covered institution's preferred lender list
  1 33 shall, upon receiving a request from a borrower, covered
  1 34 institution, or government entity, disclose to the requester in
  1 35 reasonable detail and form, the terms of private educational
  2  1 loans made to borrowers by that lending institution and the
  2  2 rates of interest charged to borrowers for private educational
  2  3 loans in the year preceding the disclosures.
  2  4    2.  A lender or lending institution providing a private
  2  5 educational loan to a borrower in this state shall, prior
  2  6 to the borrower signing a loan agreement, disclose to the
  2  7 borrower in reasonable detail and form, the terms of the loan
  2  8 being provided to the borrower. Such disclosure shall include
  2  9 but is not limited to an estimate of the total cost of the
  2 10 loan, taking into consideration the interest rate applied to
  2 11 the loan. The borrower shall sign a statement attesting to
  2 12 receipt of the disclosure required under this subsection, which
  2 13 statement shall be affixed to the loan agreement.
  2 14                           EXPLANATION
  2 15 The inclusion of this explanation does not constitute agreement with
  2 16 the explanation's substance by the members of the general assembly.
  2 17    This bill relates to private educational loans provided to
  2 18 borrowers in this state.
  2 19    The bill provides that the interest rate applied by a lender
  2 20 or lending institution to a private educational loan provided
  2 21 to a borrower in Iowa cannot be more than one percentage point
  2 22 over the corresponding federal student loan interest rate for
  2 23 the life of the loan. The bill defines "federal student loan
  2 24 interest rate" as the interest rate applied to an educational
  2 25 loan made, insured, or guaranteed under title IV of the federal
  2 26 Higher Education Act of 1965, as amended. To determine the
  2 27 applicable corresponding federal student loan interest rate,
  2 28 the lender or lending institution shall apply the current
  2 29 federal interest rate that corresponds to the category of the
  2 30 loan and the category of the borrower, as described in the
  2 31 bill. The bill states that the interest rate limitation shall
  2 32 not be interpreted to apply to educational loans made, insured,
  2 33 or guaranteed by the federal government.
  2 34    The bill requires a lender or lending institution to
  2 35 disclose the terms of a private educational loan to a borrower
  3  1 prior to the borrower signing an agreement for the loan. The
  3  2 disclosure must include an estimate of the total cost of the
  3  3 loan, taking the applicable interest rate into account. The
  3  4 borrower must sign a statement attesting to having received
  3  5 the disclosure, and the statement shall be affixed to the loan
  3  6 agreement.
  3  7    Pursuant to current Code section 261F.8, a lender or lending
  3  8 institution that violates a provision of Code chapter 261F is
  3  9 subject to a civil penalty of $5,000 per violation, in addition
  3 10 to other specified sanctions.
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