House Introduced Bill 5043

HOUSE BILL No. 5043

July 12, 2001, Introduced by Reps. Thomas, Kilpatrick, Daniels, McConico, Godchaux and Pumford and referred to the Committee on
Appropriations.

A bill to establish an educational loan program for employ-

ees of certain school districts studying to become teachers; to

prescribe conditions for repayment and forgiveness of the loans;

to establish a school employee teaching career loan fund and to

provide for its administration; and to prescribe powers and

duties of certain state officers, agencies, and departments.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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Sec. 1. This act shall be known and may be cited as the

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"school employee teaching career loan act".

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Sec. 2. As used in this act:

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(a) "Department" means the department of education.

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(b) "Eligible costs" means tuition and fees charged by a

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teacher education program and related costs for books and

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supplies.

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(c) "Fund" means the school employee teaching career loan

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fund created in section 6.

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(d) "Program" means the school employee teaching career loan

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program created in section 3.

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(e) "School district" means either of the following:

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(i) A school district as that term is defined in section 6

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of the revised school code, 1976 PA 451, MCL 380.6.

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(ii) A local act school district as that term is defined in

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section 5 of the revised school code, 1976 PA 451, MCL 380.5.

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(f) "Teacher shortage district" means a school district that

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meets 1 of the following:

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(i) Eight percent or more of the teachers in the district

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are not certified or endorsed, as applicable, by this state to

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teach at the level or in the subject area they teach.

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(ii) The district is designated as a teacher shortage dis-

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trict by the superintendent of public instruction for the calen-

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dar year in which a loan is applied for under this act.

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Sec. 3. The school employee teaching career loan program is

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created, to be administered by the department. The department

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shall do all of the following:

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(a) Make loans to students pursuant to this act.

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(b) Develop a loan agreement to be entered into by a loan

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recipient and the department that contains the terms of a loan

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made under this act and the rights and obligations of the loan

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recipient and the department.

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(c) Collect repayment of loans pursuant to this act.

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(d) Conduct periodic audits of loan recipients to ensure

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compliance with the terms of the loan agreement and take

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necessary steps to enforce the terms of the loan agreement.

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(e) Publicize the program.

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(f) Administer the fund.

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(g) Promulgate rules, as necessary to implement this act, in

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accordance with the administrative procedures act of 1969, 1969

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PA 306, MCL 24.201 to 24.328.

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Sec. 4. The department may award a loan under this act to

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an individual determined by the department to meet all of the

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following eligibility criteria at the time of application:

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(a) Is a United States citizen or permanent resident of the

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United States.

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(b) Has resided continuously in this state for the 12 months

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immediately preceding his or her application and is not a resi-

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dent of any other state.

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(c) Has not previously defaulted and is not currently in

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default on a student loan made or guaranteed by this state.

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(d) Is enrolled in or has been accepted into a teacher edu-

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cation program approved by the state board of education at a col-

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lege or university located in this state.

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(e) Is a full- or part-time employee of a teacher shortage

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district.

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(f) Does not hold a current teaching certificate issued by

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this state.

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(g) Has been selected or approved in writing for

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participation in the program by the teacher shortage district

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that employs him or her.

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(h) Has signed a written loan agreement with the department

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stating the individual's intention to pursue teaching as a career

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and to teach in the teacher shortage district that employs him or

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her, for a period of not less than 5 years after receipt of a

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teaching certificate from this state.

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(i) Has complied with this act and the rules promulgated

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under this act.

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(j) Meets all other standards established by department

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rule.

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Sec. 5. (1) The maximum amount of a loan made under this

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act shall be $4,000.00 per academic year for a total of not more

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than 4 academic years in a teacher education program. The 4 aca-

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demic years need not be continuous, but must be within the 6 aca-

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demic years immediately following the initial loan application.

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A loan made under this act shall be used only to pay for eligible

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costs.

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(2) The department shall pay the amount of a loan made under

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this act directly to the college or university in which the loan

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recipient is enrolled, to be applied to the loan recipient's

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account.

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(3) A loan made under this act is subject to the following

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conditions:

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(a) The loan is repayable according to the same terms as

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other student loans made or guaranteed by this state at the time

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the loan is awarded, except as follows:

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(i) The loan is subject to subdivision (b).

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(ii) The loan recipient shall repay the loan in 5 equal

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annual installments of principal and interest, with the first

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installment due 1 year after the earliest to occur of the

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following:

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(A) The loan recipient's graduation from a teacher education

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program.

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(B) Issuance of a teaching certificate to the loan recipient

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by this state.

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(C) The loan applicant's withdrawal or dismissal from the

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teacher education program in which he or she was enrolled.

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(D) The seventh anniversary of the receipt by the department

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of the loan recipient's initial loan application.

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(iii) The interest on the loan is the prime rate plus 2 per-

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centage points, as determined by the department, beginning 1 year

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after the first loan under this act.

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(b) If a loan recipient successfully completes a teacher

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education program approved by the state board of education at a

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college or university located in this state and is employed as a

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teacher by the teacher shortage district that selected or

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approved of the loan recipient's participation in the program, or

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by another school district if the teacher shortage district does

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not offer a teaching position to the loan recipient, the

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department shall forgive all or part of the obligation under

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subdivision (a) to repay the loan. The amount of loan

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forgiveness shall be determined according to subsection (4).

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(4) The department shall develop a method for calculating

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the amount of a loan repayment obligation to be forgiven that

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will result in forgiveness of 1 of the 5 equal annual install-

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ments described in subsection (3)(a)(ii) at the end of each of

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the first 5 school years that the loan recipient is employed as a

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full-time teacher by the teacher shortage district or other

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school district described in subsection (3)(b), and shall forgive

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all or part of the loan repayment obligation for a loan recipient

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qualifying under subsection (3)(b) using that calculation.

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Sec. 6. (1) There is created the school employee teaching

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career loan fund as a separate fund in the state treasury, to be

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administered by the department. The department may accept money

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from any source and shall deposit that money and amounts repaid

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on loans made under this act with the state treasurer, who shall

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credit the amounts to the fund. The fund shall be used only to

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provide money for loans made under this act.

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(2) The state treasurer shall direct the investment of the

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fund money and shall credit earnings to the fund.

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(3) Money in the fund at the end of a fiscal year shall not

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revert to the general fund but shall be carried over in the fund

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to the next fiscal year.

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