Chapter 122-5 Supplemental Education Loans
The following definitions shall apply:
(A) "Administration agreement" means the agreement or agreements entered into by the issuing authority, the director of development, and any designated administrator, pursuant to Chapter 3366. of the Revised Code, to implement the secondary market education loan program as amended or supplemented from time to time.
(B) "Costs of attendance" means all costs of a student incurred in connection with a program of study at an eligible institution, as determined by the institution, including tuition; instructional fees; room and board; books, computers, and supplies; and other related fees, charges, and expenses.
(C) "Designated administrator" means, with respect to all obligations issued prior to September 1, 1999, and to all non-federal education loans, the nonprofit corporation designated on June 8, 1983, under division (D) of section 3351.07 of the Revised Code to operate exclusively for charitable and educational purposes by expanding access to higher education financing programs for students and families in need of student financial aid. For all other purposes, "designated administrator" means the Ohio corporation that is a subsidiary of the nonprofit corporation designated under division (D) of section 3351.07 of the Revised Code and that has agreed to enter into an administration agreement with the issuing authority and the director of development, or any other person that enters into an administration agreement with the issuing authority and the director of development.
(D) "Education loan" means a loan made by an eligible lender to or for the benefit of a student in accordance with this chapter, on prescribed application and note forms and serviced by a selected servicer, for the purpose of financing part or all of the student's costs of attendance.
(E) "Eligible borrower" an individual described in paragraph (E)(1), (E)(2) or (E)(3) of this rule:
(1) Individuals who are residents of the state, and who are attending and are in good standing in, or who have been accepted for attendance at, any eligible institution located in this state or elsewhere, on a part-time or full-time basis, to pursue an associate, baccalaureate, or advanced degree or a nursing diploma;
(2) Individuals who reside outside the state and who have been accepted for attendance at, any eligible institution located good standing in, any eligible institution located in this state, on a part-time or full-time basis, to pursue an associate, baccalaureate, or advanced degree or a nursing diploma; or
(3) Individuals who are parents or legal guardians of individuals meeting the requirements set forth in paragraph (E)(1) or (E)(2) of this rule, or other persons, including employers of such individuals, borrowing under an education loan for the benefit of such individuals in order to assist them in paying costs of attendance.
(4) Pursuing an associate, baccalaureate, or advanced degree or a nursing diploma for purposes of paragraph (E)(1) or (E)(2) of this rule includes attending classes as part of a program that awards a certificate if the certificate is related to an associate, baccalaureate, or advanced degree or a nursing diploma previously obtained.
(F)(1) "Eligible institution" means an institution described in any of paragraph (F)(1)(a), (F)(1)(b), or (F)(1)(c) of this rule that satisfies all of the requirements set forth in paragraphs (F)(2), (F)(3), and (F)(4) of this rule.
(a) The institution is a state-assisted post-secondary educational institution within this state.
(b) The institution is a nonprofit institution within this state having a certificate of authorization from the Ohio board of regents pursuant to Chapter 1713. of the Revised Code.
(c) The institution is a post-secondary educational institution similar to one described in paragraph (F)(1)(a) or (F)(1)(b) of this rule that is located outside this state and that is similarly approved by the appropriate agency of that state.
(2) The institution is accredited by the appropriate regional and, when appropriate, professional accrediting association within whose jurisdiction it falls.
(3) The institution satisfies the eligibility requirements for participation in the federal family education loan program authorized under Title IV, Part B, of the "Higher Education Act of 1965," 20 U.S.C. 1071 et seq., as amended, as long as that program remains in existence. For purposes of determining whether an institution satisfies the eligibility requirements, the institution is deemed eligible so long as it meets the substantive standards under such Title IV, without regard to whether it complies with the notification and certification requirements of the federal family education loan program and participates in such program.
(4) The eligibility of the institution has not been withdrawn or limited. The eligibility of an institution may be withdrawn or limited if, as determined by the designated administrator:
(a) The percentage of outstanding education loans made to students of the institution under this program which are in default beyond grace periods exceeds a maximum permitted default percentage, as determined by the designated administrator; or
(b) The designated administrator determines, in its reasonable judgment, that the continued eligibility of the institution would adversely affect the efficient and effective operation of the program.
(G) "Eligible lender" means, subject to the limitations set forth in the administration agreement, with respect to lenders making non-federal education loans, a bank, national banking association, savings bank, savings and loan association, or credit union having an office in this state that satisfies the criteria for eligible lenders established pursuant to the policy guidelines. With respect to lenders making federal education loans, "eligible lender" means any person that is permitted to make loans under the federal family education loan program authorized under Title IV, Part B, of the "Higher Education Act of 1965," 20 U.S.C. 1071 et seq., as amended, that has an office in this state and satisfies the criteria for eligible lenders established pursuant to the policy guidelines.
(H) "Federal education loan" means an education loan that is originated in compliance with the federal family education loan program authorized under Title IV, Part B, of the "Higher Education Act of 1965," 20 U.S.C. 1071 et seq., as amended.
(I) "Issuing authority" means the treasurer of state, or the officer who by law performs the functions of the treasurer of state.
(J) "Non-federal education loan" means any education loan that is not a federal education loan.
(K) "Obligations" means the bonds, notes, or securities of this state issued by the issuing authority pursuant to Chapter 3366. of the Revised Code.
(L) "Person" means any individual, corporation, business trust, estate, trust, partnership, or association, any federal, state, interstate, regional, or local governmental agency, any subdivision of the state or any combination of these.
(M) "Policy guidelines" means the rules adopted pursuant to division (A) at section 3366.03 of the Revised Code.
(N) "Resident" means any student who would qualify as a resident of this state for state subsidy and tuition surcharge purposes under rules adopted by the Ohio board of regents under section 3333.31 of the Revised Code.
(O) "Servicer" means any loan servicer selected pursuant to the administration agreement to administer education loans.
(P) "Student" means an individual described in paragraph (E)(1) or (E)(2) of this rule who meets the requirements set forth in paragraphs (P)(1) or (P)(2), and (P)(3) of this rule. "Student" includes dependent and independent undergraduate, graduate, and professional students.
(1) To qualify as a full-time student, the student must maintain an academic workload sufficient to secure the degree or diploma toward which the student is working in no more than the number of semesters, terms, quarters, or trimesters required by that institution for all students enrolled in that student's particular program of study.
(2) To qualify as a part-time student, the student must meet the requirements set forth in the administration agreement.
(3) To be a student in "good standing" the student must satisfy the standards set forth in the administration agreement, and any education loan obtained by or for the benefit of the student must not be currently in default.
(A) Notice procedure. The procedure of the director of development for giving public notice relative to the adoption, amendment or rescission of rules shall be as set forth in Chapter 119. of the Revised Code.
(B) Purpose. The purpose of this chapter is to establish policy guidelines for implementing a program to make education loans available to eligible borrowers which will expand opportunities for higher education by fostering the provision of education loans in addition to the financial assistance otherwise available to students. The program will be implemented pursuant to the findings set forth in section 3366.02 of the Revised Code, that a need exists to stimulate the provision of education loans, and that fostering the making of such education loans supplemental to other loans is a proper public purpose, is in the public interest, is essential to the general welfare and growth of this state, and is consistent with the policy of promoting the education of state residents and supporting educational institutions within this state. Expanding educational opportunities for students by facilitating the making of education loans will be accomplished through the sale of obligations by the issuing authority, the proceeds of which will provide funds for the purchase of education loans.
(1) Chapter 3366. of the Revised Code authorizes the issuing authority to issue obligations for the purpose of providing funds for the purchase of education loans by a designated administrator. The director has adopted the rules in this chapter to set forth the general requirements and procedures applicable to the funding of education loans that are eligible for purchase.
(2) Proceeds of obligations issued by the issuing authority shall not be used to provide funding for the purchase of any education loan unless the education loan satisfies the requirements set forth in and pursuant to the rules in this chapter. Compliance with the rules in this chapter does not create any right by a borrower to a commitment or assurance that an education loan will be provided through the program.
(A) Making of education loans. The form of the loan application to be completed by the eligible borrower, criteria for approval of the education loan application, and the manner for disbursing funds upon the making of the education loan and administering and collecting the education loan will be prescribed by the designated administrator, consistent with the policy guidelines set forth in this chapter and the provisions of the administration agreement. Certain specific provisions governing the making of education loans will be set forth in the administration agreement.
(B) Sale and purchase of education loans.
(1) The designated administrator shall purchase education loans that conform to the policy guidelines and the provisions of the administration agreement provided that proceeds of obligations are available for the purchase of such loans. The designated administrator is not obligated to purchase education loans that do not conform to the policy guidelines and the provisions of the administration agreement. An eligible lender may not decline to sell to the designated administrator any non-federal education loan that has been made by the eligible lender pursuant to Chapter 3366. of the Revised Code.
(2) The purchase by the designated administrator of a non-federal education loan pursuant to Chapter 3366. of the Revised Code may be made during the period after origination of the non-federal education loan but before repayment begins. The purchase by the designated administrator of a federal education loan pursuant to Chapter 3366. of the Revised Code may be made at any time after the origination of the federal education loan.
(3) The designated administrator will purchase the education loan for an amount equal to the face amount of the education loan plus accrued interest, or for a percentage over the face amount of the education loan, as determined pursuant to the administration agreement.
(C) For purposes of this chapter, any designated administrator other than the nonprofit corporation designated under division (D) of section 3351.07 of the Revised Code shall be a person that maintains its principal place of business in the state and that has as its principal business the making, purchasing, holding, or selling of loans made to finance individuals' cost of post-secondary education.
(D) Federal education loans. All federal education loans purchased by the designated administrator pursuant to paragraph (B) of this rule shall include the reduced rate terms available to the borrower as established by the designated administrator pursuant to and in accordance with the administration agreement.
(E) Non-federal education loans.
Pursuant to and in accordance with the administration agreement, the designated administrator shall establish the terms of non-federal education loans made under this program, including applicable loan fees, rates of interest, credit criteria, limits on annual and aggregate education loan amounts, repayment periods, and education loan capacity, within the following guidelines:
(1) Origination fees.
The eligible lender or servicer will collect an origination fee established pursuant to the administration agreement which may include an amount, as determined by the designated administrator, to be remitted to the designated administrator upon origination of the non-federal education loan or at such other time as the designated administrator shall establish. Such origination fee will be deposited into one or more program guarantee funds for the purpose of securing or providing security for repayment of non-federal education loans or obligations.
(2) Loan allocation.
(a) Non-federal education loan capacity may be allocated among the various categories of institutions designated as eligible institutions in this chapter. Such allocation may be made by establishing loan capacity either as a fixed percentage of total non-federal education loans made through the program established pursuant to this chapter, or as a limitation on the number of non-federal education loans or aggregate loan value.
(b) Participation by categories of eligible lenders in the program established pursuant to this chapter may be limited pursuant to the administration agreement, to promote efficiency, continuity, and ease of administration.
(F) Special arrangements.
If the director of development determines that education loans are not being made under the program established pursuant to this chapter in the amount or manner anticipated, the designated administrator, with the consent of the director, may enter into special arrangements with one or more eligible lenders to stimulate the provision of education loans. The designated administrator may agree to pay the selected lender a purchase premium or authorize the selected lender to offer education loans to eligible borrowers on terms other than those otherwise established under the program.
(G) Disposition of federal education loans.
Pursuant to and in accordance with the administration agreement, the designated administrator shall sell any federal education loans that by their terms cease to be entitled to the reduced rate benefit then applicable to federal education loans. Any such sale shall be at a price determined in accordance with the administration agreement and shall be not less than the principal amount of plus accrued interest on the education loans being sold except that education loans that are more than ninety days delinquent or which have been in repayment for more than eighty-four months may be sold at a lower price. The sale price shall be payable either by the delivery by the purchaser of federal education loans that are then entitled to the reduced rate benefit or by the payment of cash or by a combination of federal education loans and cash. Any sale of loans may be made to any person selected by the designated administrator taking into account the price offered and the availability of sufficient reduced rate federal education loans and any sale may be made to the designated administrator or any affiliate of the designated administrator.
(H) Application of program surplus.
Any funds held by the designated administrator or any indenture trustee or other party that are no longer required to be held to pay costs or as security under any indenture shall, at the time specified by the issuing authority with the approval of the director of development, be transferred to the Ohio outstanding scholarship and the Ohio priority needs fellowship programs payment funds in accordance with section 3333.375 of the Revised Code.
(I) General authority of designated administrator.
Pursuant to Chapter 3366. of the Revised Code, the designated administrator has the authority to establish and operate on behalf of the state of Ohio an education loan secondary market program subject to the policy guidelines and the administration agreement. The designated administrator may establish program standards, terms, and conditions within the limits set forth in Chapter 3366. of the Revised Code, this chapter, and the administration agreement, and may take any other action that is necessary or appropriate to carry out the program terms and conditions, to provide for the efficient and effective administration of the program, and to advance the goal of making education assistance available to students, consistent with the provisions of Chapter 3366. of the Revised Code, this chapter, and the administration agreement.