NO. 86.  AN ACT RELATING TO THE VERMONT STUDENT ASSISTANCE CORPORATION.

(H.519)

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  The title to chapter 87 of Title 16 is amended to read:

CHAPTER 87.  GRANTS, SCHOLARSHIP, AND STUDENT LOAN PROGRAM EDUCATION LOAN PROGRAMS

Sec. 2.  16 V.S.A. § 2821(a) is amended to read:

(a)  There is hereby established a nonprofit public corporation to be known as the Vermont student assistance corporation whose purpose shall be:

(1)  to provide opportunities for persons who are residents of Vermont to attend colleges or other higher educational postsecondary education institutions by awarding grants and, guaranteeing, making, financing, and servicing loans of funds to students qualifying under the terms and conditions set forth in this chapter and section 2531a of this title, and by providing;

(2)  to provide career, educational, and financial aid counseling and information services,; and

(3)  for such other purposes not inconsistent therewith.

Sec. 3.  16 V.S.A. § 2822 is amended to read:

§ 2822.  DEFINITIONS

As used in this chapter:

(a)(1)  “Corporation” means the Vermont student assistance corporation.

(b)(2)  “Board” means the board of directors of the Vermont student assistance corporation.

(c)  [Repealed.]

(d)(3)  “Student” means any person who has:

(A)  has graduated from a secondary school or who has, satisfied the requirements for graduation by passing examinations covering the subject matter of a secondary school curriculum, or met the eligibility criteria established by the United States Secretary of Education for the receipt of student financial assistance under Title IV of the Higher Education Act, and in each case who is attending or plans to attend college an approved postsecondary education institution; or

(B)  is attending an approved postsecondary education institution.  For the purposes of the student loan program, “student” means a student as defined by the board of directors and which definition shall not be inconsistent with federal regulations.

(e)(4)  “Parents” means a parent or parents, or other person or persons legally responsible for the support of any applicant or a person or persons who claim the applicant as a dependent on United State income tax returns student’s parent or parents as determined by the corporation consistently with the requirements of the federal financial assistance programs established under Title IV of the Higher Education Act.

(f)  “Taxable income” means the combined taxable

(5)  “Adjusted gross income” means an individual’s adjusted gross income under the laws of the United States relating to federal income taxes of the student and his parents for the taxable tax year next preceding the school year from for which a grant or loan is sought.

(6)  “Approved postsecondary education institution” means any institution of  higherpostsecondary education which is:

(A)  certified by the state board of education as provided in section 176 or 176a of this title;

(B)  accredited by an accrediting agency approved by the United States Secretary of Education pursuant to the Higher Education Act;

(C)  a non-U.S. institution approved by the United States Secretary of Education as eligible for use of education loans made under Title IV of the higher education act; or

(D)  a non-U.S. institution designated by the corporation as eligible for use of its grant awards.

(g)  “Approved high school” is any secondary school in Vermont which qualifies under section 791(7) of this title and any secondary school outside of Vermont which is accredited by the New England association of colleges and secondary schools, or a comparable accrediting agency.

(h)  “Approved college” means any institution of higher education which is certified by the state board of education as provided in section 148 of this title, or any institution of higher education which is accredited by the New England association of colleges and secondary schools, or a comparable accrediting agency, or any institution accredited by the Vermont state board of nursing as provided in sections 1573-1576 of Title 26. “Approved college” shall also include any technical school or institution, which admits students who have completed the twelfth grade or its equivalent, which is legally authorized to provide a program of post-secondary or technical education designed to equip individuals for useful employment in recognized occupations and which is accredited by a nationally recognized accrediting agency or association or a state accrediting agency or association listed by the United States secretary of education pursuant to 20 U.S.C. § 1085(c)(4) (P.L. 89-329) or by any other means of accreditation approved by the state board of education.

(i)(7)  “Resident” means, with respect to a student, a student who has had his or her domicile been domiciled in Vermont for the year preceding the date of commencement of the relevant semester or academic program.  A residence established in Vermont for the purpose of attending an educational institution shall not of itself be sufficient to establish domicile in Vermont.  Whenever a resident student loses his or her Vermont domicile, as in the case of a minor whose parents move from the state, the student shall thereafter be reclassified as a nonresident.

(j)(8)  “Taxable,” when used in reference to a note, bond, or other obligation means that the interest on that obligation is includable in the gross income of the holder under the laws of the United States relating to federal income taxes.

(k)(9)  “Higher Education Act” means the federal Higher Education Act of 1965 (PL 89-329, 20 U.S.C. chapter 28), as amended, together with the rules and regulations promulgated thereunder by the United States Secretary of Education.

Sec. 4.  16 V.S.A. § 2823 is amended to read:

§ 2823.  Powers of corporation

(a)  The corporation may acquire by gift or otherwise, hold, and dispose of property in fee or in trust, or any other estate, for the purposes set forth in section 2821 of this title this chapter and shall be an instrumentality of the state.  The state shall support and maintain the corporation.

(b)  The corporation has the general powers provided to Vermont nonprofit corporations.

(c)  The Vermont student assistance corporation is hereby designated as the state agency to receive federal funds assigned to the state of Vermont for student financial aid programs.

(d)  The corporation is authorized to make and finance the making of student education loans and to issue its debt obligations for the purpose of acquiring funds therefor.  No resolution or other action of the corporation providing for the issuance of such debt obligations may be effective without the approval in writing of the governor.

(e)  The corporation is authorized to develop and implement loan programs, including programs for the guaranteeing, servicing, originating, and financing of education loans for borrowers and lenders located both within and outside the state, including the federal Direct Loan Program and other education loans made pursuant to federal law.  The corporation is authorized to make loans to residents and nonresidents.

(f)  The corporation is authorized to borrow money and issue its debt obligations to further the governmental and public purposes set forth in this chapter, including the purchase, construction, renovation, reconstruction, rehabilitation, improvement, furnishing, and equipping of office or other business space to be owned or leased by the corporation for use by the corporation to further the governmental and public purposes set forth in this chapter.  Notwithstanding subsection 2868(i) of this chapter, notes, bonds, or other obligations issued under this section may be direct and general obligations of the corporation, and may be otherwise secured as the corporation shall determine, including by a mortgage.  No debt obligation issued under this subsection may be effective without the approval in writing of the governor.  Such obligations shall not be deemed to constitute a debt or liability or obligation of the state of Vermont or of any political subdivision of it, nor shall they be deemed to constitute a pledge of the faith and credit of the state or of any political subdivision thereof.  Each obligation issued by the corporation under this section shall contain on its face a statement to the effect that neither the faith and credit nor the taxing power of the state of Vermont or any political subdivision of it is pledged to the payment of the principal or the interest on these obligations.

Sec. 5.  16 V.S.A. § 2825 is amended to read:

§ 2825.  TAX EXEMPTIONS

All real and personal property of the corporation is exempt from taxation.  All bonds, notes and other obligations issued pursuant to this chapter are issued by a body corporate and public of this state and for an essential public and governmental purpose and those bonds, notes and other obligations, and the interest thereon and income therefrom, except as otherwise provided by resolution of the corporation authorizing the issuance of taxable debt pursuant to section 2868 of this title, and all activities of the corporation and fees, charges, funds, revenues, incomes and other moneys of the corporation whether or not pledged or available to secure the payment of these bonds, notes or other obligations, or interest thereon, are exempt from all taxation, franchise taxes, fees or special assessments of whatever kind except for transfer, inheritance and estate taxes.

Sec. 6.  16 V.S.A. § 2831 is amended to read:

§ 2831.  MEMBERSHIP; VACANCIES

The corporation shall be governed and all of its powers exercised by a board of directors consisting of 11 members.  The governor shall appoint five members as follows: one person to be the financial aid officer of an institution of postsecondary education in the state of Vermont; one person to be a guidance counselor from a Vermont secondary school, and three members representing the general public.  In making the appointments of the members representing the general public, the governor shall give due consideration to the board’s needs for expertise and experience in the management of a financial institution.  The state treasurer shall be a member.  The speaker of the Vermont house of representatives and the committee on committees of the Vermont senate shall each appoint one member from their respective legislative bodies to serve on the board.  The board shall elect three additional members.  All members shall be of full age, citizens of the United States and residents of Vermont.  All appointments shall be for terms of six years with the exception of legislative members whose terms shall expire at the end of six years or when their service in the Vermont legislature is completed, whichever shall first occur.  The date of the expiration of the term of appointment in each case shall be June thirtieth 30.  Vacancies which may occur by reason of death or resignation shall be filled in the same manner as original appointments.

Sec. 7.  16 V.S.A. § 2832(c) and (d) are amended to read:

(c)  The board shall adopt bylaws for the corporation and may appoint an executive director and such clerical assistance as it deems advisable and fix their a president and determine the president’s compensation and prescribe their duties.  The chair annually shall notify the governor, the speaker of the house of representatives and the president pro tempore of the senate of the executive director’s president’s compensation.

(d)  The board may elect an executive committee to serve in the interval between meetings which may to transact such business of the corporation as provided in the bylaws.

Sec. 8.  16 V.S.A. § 2833 is amended to read:

§ 2833.  MEETINGS; QUORUM

The board shall hold regular meetings and such special meetings as it deems necessary.  A majority of the directors shall constitute a quorum for the transaction for of any business unless the bylaws of the corporation require a larger number.

Sec. 9.  16 V.S.A. § 2834(a) is amended to read:

§ 2834.  Powers and duties

(a)  The board has the power to adopt rules and, regulations, policies, and procedures not inconsistent with law, governing the application for and the granting, administration origination, servicing, and repayment of loans, or the awarding of grants to students, and the corporation’s other activities and programs.  The board shall consider the student’s financial need, his academic performance, the recommendations of his principal or headmaster, his qualities of citizenship and moral character, his examination scores of scholastic aptitude tests, and any other factors considered necessary.

Sec. 10.  16 V.S.A. § 2835 is amended to read:

§ 2835.  Controls, audits, and reports

Except for senatorial scholarships, control Control of funds appropriated and all procedures incident to the carrying out of the purposes of this chapter and section 2531a of this title shall be vested in the board of directors.  The books of account of the corporation shall be audited annually under the direction of the auditor of accounts and a report filed with the secretary of administration not later than October first of November 1 each year.  Biennially the board shall report to the legislature on its activities during the preceding biennium.

Sec. 11.  16 V.S.A. § 2841 is amended to read:

§ 2841.  Establishment; rules

Incentive grants are A need-based grant program is hereby established to aid college students who need financial assistance, and are pursuing undergraduate studies and give promise of completing satisfactorily a degree program, or who have been accepted for admission to an approved college postsecondary education institution for undergraduate studies.  The board may establish rules, regulations, and standards for the awards under this subchapter.

Sec. 12.  16 V.S.A. § 2842 is amended to read:

§ 2842.  Eligibility

(a)  To qualify for a state an incentive grant for the first year of undergraduate study, a student must be in attendance at an approved college postsecondary education institution or be accepted for admission and be enrolled as a full time full-time or part-time student at such an institution.  For each year following the first year of undergraduate study, the student must have been certified by the college institution attended to be in good standing and to give promise of satisfactory completion of a course of study leading to a degree or diploma.

(b)  Any qualified person may accept a state apply for an incentive grant in addition to any other scholarship aid except a senatorial scholarship.

Sec. 13.  16 V.S.A. § 2843 is amended to read:

§ 2843.  Applications, AFFIDAVITS certificates, and reports

(a)  The recipient must apply for a an incentive grant at least annually.  Grants made under this section and section 2842 of this title may be for a maximum of four school years unless the requirements for a degree demand a greater number of school years, but in no case shall the number of school years exceed five for the completion of an undergraduate degree five full-time equivalent school years.

(b)  Each applicant for a state an incentive grant shall furnish an affidavit a certificate of income with the application.  Attached to the affidavit certificate shall be a form of consent, executed by the student and his parents any other required persons, granting permission to the Vermont commissioner of taxes to disclose the income tax information required by subsection (c) of this section.

(c)  The Vermont commissioner of taxes, when requested by the board corporation, shall compare any affidavit certificate filed pursuant to this subchapter with the state income tax returns filed by the persons making such affidavit certificate and shall report any instances of discrepancy to the board corporation.

(d)  Except as otherwise provided in this subchapter, affidavits or other applicable law or court order, or by agreement of the applicant, certificates and reports made to the board corporation under this section shall be confidential, and it shall be unlawful for anyone to divulge the amount of income or any particulars set forth in the affidavit filed by him or his parents a certificate or any report made to him or the board an applicant or the corporation.  Nothing herein shall be construed to prevent the publication of statistical data as long as the identification of particular affidavits individuals, certificates, and reports is prevented.

Sec. 14.  16 V.S.A. § 2844 is amended to read:

§ 2844.  Amount received; proration

(a)  Each undergraduate student who qualifies under sections 2842 and 2843 of this title may apply for an incentive grant on forms provided by the corporation, if the combined family taxable income is not in excess of $10,000.00.  In cases where taxable income exceeds the existing maximum and there is more than one child in college, or there are unusual circumstances which affect the family financial strength, the board may consider the student for an incentive grant.  The amount of individual incentive grants shall be allocated among eligible recipients according to established need, and in total amount shall not exceed the funds made available from legislative appropriation or other sources. Such grants shall further be subject to the prior establishment of a reserve for needy cases arising after the application deadline established by the corporation. In no case shall a student’s award be larger than that needed to attend the institution of higher learning of his choice for an incentive grant shall apply on forms provided by the corporation.  The corporation may consider the student for an incentive grant if the student meets the need-based eligibility standards established by the board.  These standards shall give due consideration to all relevant factors affecting grant.the student’s need, including the adjusted gross income and other sources of income of the student’s parents; the adjusted gross income and other sources of income of a nondependent student; the assets of parents and students; the number of a parent’s or nondependent student’s children who are students enrolled in approved postsecondary education institutions at the same time; and any unusual circumstances which affect the family financial strength.  Incentive grants shall be awarded on a rolling basis to eligible applicants based upon established need, and in total amount shall not exceed the funds made available from legislative appropriation or other sources.  In no case shall a student’s award be larger than that needed to attend the approved postsecondary education institution of the student’s choice.

(b)  The board corporation may prorate the incentive grants herein provided on the basis of semesters or, other recognized portions of a school year, or course load.

(c)  Vermont resident students enrolled at the medical college of the University of Vermont or enrolled in a program leading to the degree of Doctor of Veterinary Medicine shall be eligible to apply for an incentive grant and shall be subject to the provisions of subsection (b) of this section.  In addition, veterinary students entering in 1996 and thereafter shall be eligible for grants not to exceed twice the amount of the average grant award made to full-time undergraduate students in the previous year under subsection (a) of this section.

Sec. 15.  16 V.S.A. § 2845 is added to read:

§ 2845.  Nondegree grants

The corporation may establish grant programs for residents pursuing nondegree education and training opportunities who do not meet the definition of student in subdivision 2822(3) of this title, and who may not meet the requirements of this subchapter.  Nondegree grants may be used at institutions that are not approved postsecondary education institutions.  The corporation may adopt rules or establish policies, procedures, standards, and forms for nondegree grants, including the requirements for applying for and using the grants and the eligibility requirements for the institutions where the grants may be used.

Sec. 16.  The title of 16 V.S.A. chapter 87, subchapter 4 is amended to read:

Subchapter 4.  Honor Scholarship; Grants Scholarships

Sec. 17.  16 V.S.A. § 2851 is amended to read:

§ 2851.  Establishment

Vermont honor scholarships are hereby established for students who have been accepted for admission to an approved college defined in section 2822(h) of this title secondary school seniors who plan to attend an approved postsecondary education institution.

Sec. 18.  16 V.S.A. § 2852 is amended to read:

§ 2852.  Eligibility

(a)  All resident, qualified high school highsecondary school seniors are eligible to be nominated by their secondary school for a Vermont honor scholarship.

(b)  Vermont honor scholarships shall be awarded on the basis of merit as demonstrated by scholastic excellence and participation in extracurricular and community service activities to be determined by such criteria as the board shall prescribe.

Sec. 19.  16 V.S.A. § 2853 is amended to read:

§ 2853.  Application

Any qualified student may apply for an honor scholarship grant as well as a state incentive grant as per sections 2841 through 2844 of this title.  The honor scholarship award shall not be considered in determining the amount to be awarded by the state incentive grant A qualified student may apply forbe awarded an honor scholarship without affecting eligibility for an incentive grant.  The honor scholarship amount shall not be considered in determining the calculation of the initial amount of the grant, unless the student’s total grant and scholarship assistance from all sources exceeds the cost of attendance as defined under the Higher Education Act.

Sec. 20.  16 V.S.A. § 2854 is amended to read:

§ 2854.  Amount AND; number; disbursement

(a)  Each Vermont honor scholarship shall be an equal amount and no less than $1,000.00 as determined by the board.

(b)  Each high school and vocational-technical center in Vermont secondary school, or a border school serving Vermont high school secondary school students, may nominate one student a senior for a Vermont honor scholarship.

(c)  The scholarship shall be disbursed to the approved postsecondary education institution at which the recipient enrolls.

Sec. 21.  16 V.S.A. § 2856 is amended to read:

§ 2856.  EDUCATIONAL ASSISTANCE

(a)  An active member of the Vermont army national guard or the air national guard may be eligible for an interest-free loan in an academic year for financial assistance to pay for tuition and fees for courses taken at a Vermont college, university, or regional technical center.  Academic year awards may be up to the in-state tuition rate at the Vermont state colleges for that year.

(b)  To be eligible for an educational loan under this section, a person shall:

(1)  [Deleted.]

(2)(1)  be an active member in good standing of a federally-recognized unit of the Vermont army national guard or air national guard;

(3)(2)  have successfully completed basic training or commissioning;

(4)(3)  not hold a baccalaureate degree or higher; and

(5)(4)  be enrolled in a program that leads to a postsecondary degree, diploma or be studying for relevant continuing education purposes.

(c)  A loan awarded made under this section shall be interest free and may be partially or completely cancelled and forgiven for a person who:

(1)  submits certification that the person has successfully completed the course; and

(2)  submits certification that the person has completed two years of national guard service for each full academic year award.  Service requirements for less than a full academic year award shall be proportionate to the amount of the award.  The board shall determine the amount of loan to be cancelled for each completed year of service.  The amount cancelled for each year of service shall not exceed 50 percent of the loan.

* * *

(h)  The availability of loans made under this subchapter is subject to funds appropriated to the Vermont army or air national guard for that purpose.

Sec. 22.  The title to subchapter 5 of chapter 87 of Title 16 is amended to read:

Subchapter 5.  Student Education Loan Program

Sec. 23.  16 V.S.A. § 2861 is amended to read:

§ 2861.  Establishment

There is hereby created a higher an education loan program for the purpose of assisting qualified resident Vermont students to pursue schooling beyond the secondary level.  It is the intention of the legislature in establishing the education loan program under this subchapter to serve Vermont resident students and their families throughout their educational careers; and to serve nonresident students attending Vermont postsecondary institutions and the families of those students throughout their educational careers.  It is also the intention of the legislature that education loans made under this subchapter not be collateralized at the time of their origination.

Sec. 24.  16 V.S.A. § 2862 is amended to read:

§ 2862.  Rules and regulations

(a)  The board shall establish adopt rules and regulations and establish policies and procedures which it deems necessary to carry out the purpose of this subchapter.  The rules and regulations so established adopted shall contain  include provisions relating to student borrower eligibility, maximum loan amounts and, interest rates, and other charges.

(b)  In the case of loans reinsured under Public law 89-329, as amended  the Higher Education Act, the rules and regulations shall conform to federal requirements the requirements of that act.

(c)  The rules and regulations may provide that educational loans guaranteed, made, financed, serviced or otherwise administered by the corporation are exempt from the interest rate and charges limitations in sections 41a and 42 of Title 9 Education loans guaranteed, made, financed, serviced, or otherwise administered by the corporation are exempt from the interest rate and charges limitations of sections 41a and 42 of Title 9, but those rates and charges shall reflect the corporation’s costs of funds, its costs of education loan financing and servicing, and the risks associated with different types of education loans.

(d)  Loans made pursuant to PL 89-329, as amended, the Higher Education Act by institutions doing business in Vermont shall be made pursuant to this chapter.

Sec. 25.  16 V.S.A. § 2863 is amended to read:

§ 2863.  Guarantee

The corporation is authorized to guarantee that any education loan notes properly executed shall be repaid according to their tenor and, if guaranteed under the Higher Education Act, to the extent authorized under that act, provided, that in the event of default, the holder has complied with the rules, regulations, and procedures of the corporation, and with said the act and the regulations promulgated thereunder, regarding the making, servicing, and diligent collection of student education loans until assigned to the corporation as hereinafter provided.  The corporation may make loans that have no guarantee.

Sec. 26.  16 V.S.A. § 2864 is amended to read:

§ 2864.  Reserve fund

(a)  The corporation shall establish and maintain a guarantee reserve fund equal to the amount provided in the Higher Education Act, but in no event less than eight per cent of the portion of any an allowance for loans not covered by federal reinsurance which it estimates to be outstanding during each fiscal year  a federal or other guaranty or insurance, using historical loan delinquency and default rates and other relevant information.  To the extent the reserve fund contains any monies appropriated by the state, such reserve funds shall be held and administered in accordance with sections 432 and 433 of Title 32.  Any reimbursement required under No. 38 of the Acts of 1964 shall be taken from the guarantee reserve fund.  Any such reserve funds on such loans such allowance may not be funded from monies appropriated by the general assembly to the corporation unless specifically appropriated for such purposes.

(b)  The corporation is authorized to negotiate and enter into agreement with the United States Secretary of Education to reinsure its guarantee of any loans made under this chapter, and to amend such agreements, consistent with this chapter.

Sec. 27.  16 V.S.A. § 2865 is amended to read:

§ 2865.  DEFAULT

A holder of a loan guaranteed pursuant to this chapter may submit a default claim to the corporation for payment when a student borrower has failed to make an installment payment of principal or interest or both when due or to comply with other terms of the note or other written evidence of agreement, which persists beyond the delinquency period provided in the Higher Education Act.  Upon the holder’s compliance with the servicing and the default claim filing requirements specified in section 2863 of this chapter, the corporation shall pay the holder the amount due as described in section 2863 of this title.  Upon reimbursement, the holder shall assign the note to the corporation, but such assignment may be without representation or warranty, expressed or implied, and without recourse.

Sec. 28.  16 V.S.A. § 2866 is amended to read:

§ 2866.  Rights of minors

A person under eighteen 18 years of age shall not be disqualified or lack capacity by reason of his the person’s minority, but shall have the rights, powers, privileges, and obligations of a person of full age with respect to executing instruments under this subchapter.

Sec. 29.  16 V.S.A. § 2869(d) is added to read:

(d)  This section is subject to the availability of funds specifically appropriated for loan cancellations under this section.

Sec. 30.  REPEAL

16 V.S.A. chapter 87, subchapter 6 (part-time student grants) is repealed.

Approved:  April 6, 2004