PRINTER'S NO. 220
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
143
Session of
2021
INTRODUCED BY AUMENT, BROWNE, SCAVELLO, YUDICHAK, FONTANA,
J. WARD, BOSCOLA AND PITTMAN, FEBRUARY 22, 2021
REFERRED TO EDUCATION, FEBRUARY 22, 2021
AN ACT
Amending Title 24 (Education) of the Pennsylvania Consolidated
Statutes, establishing the Student Loan Retirement Agreement
Program and the Student Loan Retirement Agreement Advisory
Committee.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 24 of the Pennsylvania Consolidated
Statutes is amended by adding a chapter to read:
CHAPTER 73
STUDENT LOAN RETIREMENT AGREEMENT PROGRAM
Sec.
7301. Scope of chapter.
7302. Definitions.
7303. Student Loan Retirement Agreement Program.
7304. Program administration.
7305. Terms and conditions.
7306. Line of credit.
7307. Student Loan Retirement Agreement Advisory Committee.
7308. Public awareness and education.
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ยง 7301. Scope of chapter.
This chapter relates to the Student Loan Retirement Agreement
Program.
ยง 7302. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Benefactor." A person that has incurred student loan debt
on behalf of an eligible applicant. The term includes an
eligible applicant's parents.
"College or university." An institution of higher education
accredited by an agency recognized under section 496 of the
Higher Education Act of 1965 (Public Law 89-329, 20 U.S.C. ยง
1099b), which is approved by the program administrator in
consultation with the committee.
"Committee." The Student Loan Retirement Agreement Advisory
Committee established under section 7307 (relating to Student
Loan Retirement Agreement Advisory Committee).
"Cost of education." The cost of education contemplated by
Title I, Part C of the Higher Education Act of 1965 (Public Law
89-329, 20 U.S.C. ยง 1015 et seq.) paid to a college or
university.
"Eligible applicant." An individual who has been determined
by the program administrator under section 7304 (relating to
program administration) to be eligible for the program.
"Income." Adjusted gross income for Federal income tax
purposes.
"Income share agreement." An agreement which states the
terms and conditions between a participant and a provider and
commits the participant to pay a specific share or percentage of
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the participant's income, for a period of time and at
frequencies specified under the terms and conditions, in
exchange for a payment to the participant to be used to repay
the participant's or a benefactor's student loan debt.
"Line of credit." The line of credit from the State Treasury
established for the program administrator or providers to
borrow, repay and reborrow under the program on a revolving
basis under section 7306 (relating to line of credit).
"Participant." An eligible applicant who enters into an
income share agreement with a provider.
"Program." The Student Loan Retirement Agreement Program
established under section 7303 (relating to Student Loan
Retirement Agreement Program).
"Program administrator." The Pennsylvania Higher Education
Assistance Agency.
"Program guidelines." The policies, procedures and
guidelines established by the program administrator, in
consultation with the committee, for the administration of the
program.
"Provider." The program administrator or an entity created
or designated by the program administrator, in consultation with
the committee.
"Related securitie s." A security which results from the
securitization of the income share agreement, the use of an
income share agreement as collateral for direct and indirect
borrowing or the use of an income share agreement in connection
with a similar structured finance program approved by the
program administrator.
"Student loan debt." Debt incurred by an eligible applicant
or by the eligible applicant's benefactors on the eligible
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applicant's behalf to pay for the cost of education.
"Terms and conditions." The terms and conditions specified
under section 7305 (relating to terms and conditions).
"Treasurer." The State Treasurer of the Commonwealth.
"Underwriting criteria." The credit and other criteria
established by the program administrator and used by a provider
to determine:
(1) whether to purchase an income share agreement from
an eligible applicant;
(2) the terms and conditions of an income share
agreement for an eligible applicant; and
(3) whether the income share agreement or an income
share agreement related security is saleable.
ยง 7303. Student Loan Retirement Agreement Program.
(a) Establishment.--The Student Loan Retirement Agreement
Program is established to facilitate the repayment of student
loan debt by participants and benefactors. Under the program,
the program administrator shall determine if an individual is an
eligible applicant. If the individual is determined an eligible
applicant, a provider may enter into an income share agreement
with the participant in exchange for satisfying the student loan
debt of the participant or a benefactor with money advanced
under the line of credit. The provider shall sell the income
share agreements the provider enters into with participants or
create, aggregate and sell related securities composed of or
resulting from the income share agreements the provider enters
into with participants.
(b) Administration.--The program shall be administered by
the program administrator in consultation with the committee.
The program administrator may create, utilize, fund or own a
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provider and hire consultants, attorneys and financial advisors
and professionals as deemed necessary to facilitate the
administration of the program and the use of the program by
participants.
(c) Guidelines.--The program administrator, in consultation
with the committee, shall develop program guidelines as are
necessary for the administration of the program within one year
of the effective date of this subsection.
(d) Proceeds.--Proceeds from the sale of income share
agreements and related securities shall be used to pay
transaction and administrative costs and to repay money advanced
by the treasurer in accordance with section 7305 (relating to
terms and conditions).
(e) Commonwealth payment.--If the program is canceled by the
committee in consultation with the program administrator, the
Commonwealth shall pay the program administrator costs that are
not paid in connection with a sale of an income share agreement
or a related security, incurred by the program administrator to
administer the program under this chapter.
ยง 7304. Program administration.
(a) Application.--An individual shall apply to the program
administrator to retire an eligible applicant's or a
benefactor's student loan debt under the program. The
application shall be on the forms and in the manner as
established by the program administrator.
(b) Review.--
(1) The program administrator shall review the
application and any other information the program
administrator deems necessary to determine if an individual
applying under subsection (a) meets all of the following:
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(i) The individual is a current resident of this
Commonwealth.
(ii) The individual is currently employed in this
Commonwealth.
(iii) The individual has been employed in this
Commonwealth for the period of time required by the
program guidelines.
(iv) The individual is a graduate of an approved
college or university or other institution specified in
the program guidelines.
(v) The individual has incurred, or the individual's
benefactors have incurred, student loan debt to finance
the cost of education of the individual.
(vi) The student loan debt is currently in a state
of repayment and required payments are being timely made.
(2) In addition to the criteria under paragraph (1), the
program administrator, in consultation with the committee,
may establish and utilize other criteria in the program
guidelines to determine eligibility.
(c) Determination.--If the program administrator determines
the individual to be an eligible applicant, the program
administrator shall refer the eligible applicant to a provider.
(d) Purchase.--Using the underwriting criteria, a provider
may enter into an income share agreement with an eligible
applicant if the income share agreement meets the requirements
of section 7305 (relating to terms and conditions) and the
participant accepts the terms and conditions. Using money
advanced under section 7306(b) (relating to line of credit) and
in exchange for the income share agreement, the provider shall
satisfy the portion of the student loan debt which was purchased
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from the participant or the participant's benefactor under the
income share agreement.
(e) Sale.--A provider shall aggregate and sell the income
share agreements it enters into with participants or create,
aggregate and sell the related securities composed of or
resulting from the income share agreements the provider enters
into with participants. Proceeds from the sale of the income
share agreements or related securities shall be used to satisfy
obligations in accordance with the following order:
(1) Pay transaction costs of the sale of the income
share agreements or related securities.
(2) Pay administrative expenses of the program
administrator.
(3) Pay administrative expenses of the provider.
(4) Repay advances made under section 7306.
(f) Servicing.--The program administrator shall service the
income share agreements entered into under the program on behalf
of providers and purchasers of income share agreements or
related securities. Payments required under an income share
agreement shall be collected by the program administrator and
distributed in accordance with the terms of the sale of the
income share agreements or related securities.
ยง 7305. Terms and conditions.
An income share agreement shall include the following terms
and conditions:
(1) The amount of student loan debt to be repaid by the
participant.
(2) The percentage of the income of the participant
fixed as the share of the income due from the participant
consistent with the program guidelines.
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(3) The frequency of payments to be made by the
participant under the income share agreement consistent with
the program guidelines.
(4) The total number of payments the participant must
make under the income share agreement and any cap on the
total number of payments consistent with the program
guidelines.
(5) The term that payments must be made by the
participant under the income share agreement, not to exceed a
number of years consistent with the program guidelines.
(6) The terms and conditions under which the participant
may prepay, defer, extend or extinguish future payments under
the income share agreement consistent with the program
guidelines.
(7) The consumer protections established by the program
guidelines.
(8) Other terms and conditions established by the
program guidelines.
ยง 7306. Line of credit.
(a) Creation.--The treasurer shall make available a
revolving line of credit to a provider and shall advance money
reasonably required in the judgment of the program
administrator, in consultation with the committee, to fund the
acquisition of income share agreements from participants and to
fund the administration and operation of the program. The line
of credit authorized by this subsection shall be in addition to
any line of credit advanced by the treasurer to the program
administrator on the effective date of this subsection.
(b) Draws.--A provider may borrow, repay and borrow under
the line of credit to purchase income share agreements under
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section 7304(d) (relating to program administration).
(c) Additional draws.--The program administrator may
periodically draw and borrow under the line of credit and repay
and reborrow under the line of credit on a revolving basis as
necessary for the administration and operation of the program.
(d) Source of money.--
(1) Except as provided in paragraph (3), amounts
advanced by the treasurer under the line of credit shall be
drawn by the treasurer from any fund the committee designates
in consultation with the treasurer.
(2) Any draw under paragraph (1) shall be made first
from uninvested dollars and then from investments with the
lowest possible yield.
(3) No draws shall be made from the 529 College Savings
Program.
(e) Interest.--Interest on amounts drawn on the line of
credit shall be due from the date of the draw until repayment at
the rate of interest, if any, at which the money was invested by
the treasurer.
(f) Limitation.--Unless the committee authorizes an increase
in accordance with subsection (g), the aggregate amount of draws
outstanding under the line of credit shall not exceed
$110,000,000.
(g) Increase.--Notwithstanding subsection (f), the
committee, in consultation with the program administrator, may
increase the limitation on the aggregate amount of draws
outstanding under the line of credit authorized by subsection
(a).
ยง 7307. Student Loan Retirement Agreement Advisory Committee.
(a) Establishment.--The Student Loan Retirement Agreement
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Advisory Committee is established .
(b) Powers and duties.--The committee shall oversee the
program and shall assist the program administrator in developing
program guidelines.
(c) Composition.--Th e committee shall be composed of the
following individuals:
(1) The Governor, or a designee.
(2) The Secretary of the Budget.
(3) The Secretary of Education.
(4) Three residents of the Commonwealth appointed by the
Governor.
(5) The treasurer.
(6) The following members of the General Assembly:
(i) One member of the Senate appointed by the
President pro tempore.
(ii) One member of the Senate appointed by the
Minority Leader of the Senate.
(iii) One member of the House of Representatives
appointed by the Speaker of the House of Representatives.
(iv) One member of the House of Representatives
appointed by the Minority Leader of the House of
Representatives.
(v) The chairperson and minority chairperson of the
Appropriations Committee of the Senate.
(vi) The chairperson and minority chairperson of the
Appropriations Committee of the House of Representatives.
(d) Terms.--A committee member appointed under subsection
(c)(4) shall serve at the pleasure of the Governor.
(e) Appointments.--Appointments to the committee shall be
made not later than 60 days after the effective date of this
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subsection.
(f) Meetings.--The committee shall meet for the first time
not later than 120 days after the effective date of this
subsection and at least biannually thereafter to review and
update program guidelines as necessary.
(g) Operation.--The Governor shall be the chairperson of the
committee. A majority of the members present shall constitute a
quorum. A majority vote shall be necessary for the committee to
take action.
(h) Compensation.--A committee member may not receive a
salary, but shall be entitled to reimbursement of the member's
expenses.
ยง 7308. Public awareness and education.
(a) Requirement.--The program shall include methods designed
to raise general public awareness of and to educate students,
graduates, colleges and universities and faculty about income
share agreements and the program. Education shall include the
structure, benefits and risks associated with income share
agreements.
(b) Implementation.--The program administrator shall
implement the education required under subsection (a) in the
manner it deems appropriate, which may include:
(1) An outreach campaign utilizing print media, social
media, brochures, advertisements, public service
announcements and other similar channels.
(2) Distribution of program-related educational
information:
(i) to colleges and universities; and
(ii) through college and university admission
offices.
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(3) Distribution of income share agreements and program-
related information to organizations which supply admission
and educational financing-related publications and services
to colleges and universities.
(4) Inclusion of educational and awareness materials in
newsletters and other media used by the program administrator
in connection with general higher education financing and
nonfinancing programs.
Section 2. This act shall take effect in 60 days.
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