98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB5323

 

Introduced , by Rep. Jack D. Franks

 

SYNOPSIS AS INTRODUCED:
 
New Act
30 ILCS 105/5.855 new

    Creates the Pay It Forward, Pay It Back Act. Establishes a program to provide loans to eligible students to attend an institution of higher learning in this State that are to be repaid, in part, according to the income of the student borrowers. Sets forth the Pay It Forward, Pay It Back Program Fund where moneys in the fund shall be kept for the sole purpose of awarding program loans under the Act. Provides that the Department of Revenue shall administer the program and by rule develop the loan application process. Sets forth provisions governing loan repayment. Requires the Department to submit an annual report to the General Assembly. Amends the State Finance Act to create the Pay It Forward, Pay It Back Program Fund. Effective immediately.


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FISCAL NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

 

 

A BILL FOR

 

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1    AN ACT concerning education.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the Pay It
5Forward, Pay It Back Act.
 
6    Section 5. Definitions. As used in this Act:
7    "Borrower" means a person who has been awarded and accepts
8a program loan under this Act.
9    "Covered tuition" means the total sum charged for the
10credits required for attendance at an institution of higher
11learning for a full-time undergraduate academic period.
12"Covered tuition" includes fees and other charges customarily
13imposed on all students, but does not include charges for room
14and board, books, or supplies.
15    "Department" means the Department of Revenue.
16    "Eligible student" means a person who is a resident of this
17State and has been accepted to or enrolled in an institution of
18higher learning.
19    "Fund" means the Pay It Forward, Pay It Back Program Fund.
20    "Institution of higher learning" has the meaning ascribed
21to it in Section 10 of the Higher Education Student Assistance
22Act.
23    "Program" means the Pay It Forward, Pay It Back Program

 

 

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1established under this Act.
2    "Program loan" means a loan awarded by the Department to an
3eligible student under the program.
 
4    Section 10. Pay It Forward, Pay It Back Program.
5    (a) The Pay It Forward, Pay It Back Program is established
6to provide loans to eligible students under this Act. These
7loans are to be repaid, in part, according to the income of the
8eligible students.
9    (b) The Pay It Forward, Pay It Back Program Fund is
10established in the State Treasury. The moneys in the Fund shall
11be appropriated on a continuing basis to the Department for the
12sole purpose of awarding program loans under this Act. The Fund
13shall consist of the funds deposited according to subsection
14(c) of this Section, the repayment of program loans, interest
15earned on the moneys in the Fund, and other funds appropriated
16or made available to the Fund.
17    (c) The Pay It Forward, Pay It Back Program shall be funded
18by redirecting 75% of General Assembly's appropriation to the
19Department of Commerce and Economic Opportunity for awarding
20tax credits under the Economic Development for a Growing
21Economy Tax Credit Act and depositing that amount into the Pay
22It Forward, Pay It Back Program Fund.
23    (d) An eligible student may submit an application to the
24Department for a program loan. Loans shall only be issued from
25available funds. The application shall be in such form as

 

 

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1required by the Department and shall include family income and
2such other information as required by the Department. The
3Department shall review the application and, if satisfied that
4the applicant is an eligible student and is not ineligible for
5loan assistance under subsections (a) and (b) of Section 35 of
6the Higher Education Student Assistance Act, shall award a
7program loan to the applicant.
8    (e) If demand for program loans exceed available funding,
9then priority shall be given to those applicants with the
10highest levels of academic achievement and who belong to the
11lowest income demographic. The process for determining
12priority shall be established by the Department by rule.
13    (f) The amount of a program loan shall be:
14        (1) if the family income of the eligible student is
15    below 300% of the federal poverty level, 100% of covered
16    tuition;
17        (2) if the family income of the eligible student is
18    between 300% and 450% of the federal poverty level, 66% of
19    covered tuition; or
20        (3) if the family income of the eligible student is
21    between 450% and 600% of the federal poverty level, 33% of
22    covered tuition.
23    (g) The Department may not charge interest on a program
24loan.
25    (h) By accepting a program loan, an eligible student shall
26agree to repay the amount of the program loan, plus a default

 

 

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1insurance premium amount to be determined by the Department
2subject to the following:
3        (1) Repayment shall commence not later than 36 months
4    after the eligible student graduates from the institution
5    of higher learning or becomes employed full time, whichever
6    occurs first. The 36-month period may be extended by the
7    Department if the borrower can demonstrate to the
8    satisfaction of the Department that the borrower has made a
9    good faith effort to obtain full-time employment, but has
10    been unable to do so. The duration of the extension shall
11    be determined at the sole discretion of the Department.
12        (2) The monthly amount required to be repaid shall be
13    based on the repayment schedule that the Department shall
14    by rule develop.
15        (3) If at any time during the repayment period the
16    borrower leaves the work force, except in the case of a
17    disability, the monthly amount required to be repaid shall
18    be based on one-half of the estimated annual taxable income
19    of the borrower that is reportable to the Department,
20    subject to the limitation specified in item (2) of this
21    subsection.
22        (4) Monthly payments shall continue until the borrower
23    has fully paid the amount of the program loan and the
24    default insurance premium amount.
25        (5) The Department may defer repayment during any time
26    period that the borrower is enrolled full-time or part-time

 

 

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1    in a postgraduate degree program at an institution of
2    higher learning.
3        (6) Award recipients who either leave or are dismissed
4    from the institution of higher learning prior to graduation
5    shall pay to the State the amount borrowed under the
6    program together with interest of 5% per year on that
7    amount.
8    (i) To administer the program, the Department may exercise
9the same powers of collection as otherwise authorized by law.
10    (j) The Department shall forgive the repayment of a program
11loan if the borrower dies or becomes disabled.
12    (k) The Department may establish and administer, or
13contract with a third party to do so, a default insurance plan
14for program loans in which eligible students have defaulted on
15repayment of their program loans.
16    (l) The Department shall submit an annual report to the
17General Assembly. The report shall describe the financial
18stability of the fund and student success metrics utilized,
19both for initiated loan awards and loan continuances within the
20program. The Board of Higher Education shall submit an annual
21report to the General Assembly that is based upon the annual
22report provided by the Department and that contains
23recommendations to improve student outcomes.
 
24    Section 500. The State Finance Act is amended by adding
25Section 5.855 as follows:
 

 

 

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1    (30 ILCS 105/5.855 new)
2    Sec. 5.855. The Pay It Forward, Pay It Back Program Fund.
 
3    Section 999. Effective date. This Act takes effect upon
4becoming law.