January 28, 2003, Introduced by Senator THOMAS and referred to the Committee on Education.
A bill to establish an educational loan program for
employees 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:
1 Sec. 1. This act shall be known and may be cited as the
2 "school employee teaching career loan act".
3 Sec. 2. As used in this act:
4 (a) "Department" means the department of education.
5 (b) "Eligible costs" means tuition and fees charged by a
6 teacher education program and related costs for books and
7 supplies.
1 (c) "Fund" means the school employee teaching career loan
2 fund created in section 6.
3 (d) "Program" means the school employee teaching career loan
4 program created in section 3.
5 (e) "School district" means either of the following:
6 (i) A school district as that term is defined in section 6
7 of the revised school code, 1976 PA 451, MCL 380.6.
8 (ii) A local act school district as that term is defined in
9 section 5 of the revised school code, 1976 PA 451, MCL 380.5.
10 (f) "Teacher shortage district" means a school district that
11 meets 1 of the following:
12 (i) Eight percent or more of the teachers in the district
13 are not certified or endorsed, as applicable, by this state to
14 teach at the level or in the subject area they teach.
15 (ii) The district is designated as a teacher shortage
16 district by the superintendent of public instruction for the
17 calendar year in which a loan is applied for under this act.
18 Sec. 3. The school employee teaching career loan program is
19 created, to be administered by the department. The department
20 shall do all of the following:
21 (a) Make loans to students pursuant to this act.
22 (b) Develop a loan agreement to be entered into by a loan
23 recipient and the department that contains the terms of a loan
24 made under this act and the rights and obligations of the loan
25 recipient and the department.
26 (c) Collect repayment of loans pursuant to this act.
27 (d) Conduct periodic audits of loan recipients to ensure
1 compliance with the terms of the loan agreement and take
2 necessary steps to enforce the terms of the loan agreement.
3 (e) Publicize the program.
4 (f) Administer the fund.
5 (g) Promulgate rules, as necessary to implement this act, in
6 accordance with the administrative procedures act of 1969, 1969
7 PA 306, MCL 24.201 to 24.328.
8 Sec. 4. The department may award a loan under this act to
9 an individual determined by the department to meet all of the
10 following eligibility criteria at the time of application:
11 (a) Is a United States citizen or permanent resident of the
12 United States.
13 (b) Has resided continuously in this state for the 12 months
14 immediately preceding his or her application and is not a
15 resident of any other state.
16 (c) Has not previously defaulted and is not currently in
17 default on a student loan made or guaranteed by this state.
18 (d) Is enrolled in or has been accepted into a teacher
19 education program approved by the state board of education at a
20 college or university located in this state.
21 (e) Is a full- or part-time employee of a teacher shortage
22 district.
23 (f) Does not hold a current teaching certificate issued by
24 this state.
25 (g) Has been selected or approved in writing for
26 participation in the program by the teacher shortage district
27 that employs him or her.
1 (h) Has signed a written loan agreement with the department
2 stating the individual's intention to pursue teaching as a career
3 and to teach in the teacher shortage district that employs him or
4 her, for a period of not less than 5 years after receipt of a
5 teaching certificate from this state.
6 (i) Has complied with this act and the rules promulgated
7 under this act.
8 (j) Meets all other standards established by department
9 rule.
10 Sec. 5. (1) The maximum amount of a loan made under this
11 act shall be $4,000.00 per academic year for a total of not more
12 than 4 academic years in a teacher education program. The 4
13 academic years need not be continuous, but must be within the 6
14 academic years immediately following the initial loan
15 application. A loan made under this act shall be used only to
16 pay for eligible costs.
17 (2) The department shall pay the amount of a loan made under
18 this act directly to the college or university in which the loan
19 recipient is enrolled, to be applied to the loan recipient's
20 account.
21 (3) A loan made under this act is subject to the following
22 conditions:
23 (a) The loan is repayable according to the same terms as
24 other student loans made or guaranteed by this state at the time
25 the loan is awarded, except as follows:
26 (i) The loan is subject to subdivision (b).
27 (ii) The loan recipient shall repay the loan in 5 equal
1 annual installments of principal and interest, with the first
2 installment due 1 year after the earliest to occur of the
3 following:
4 (A) The loan recipient's graduation from a teacher education
5 program.
6 (B) Issuance of a teaching certificate to the loan recipient
7 by this state.
8 (C) The loan applicant's withdrawal or dismissal from the
9 teacher education program in which he or she was enrolled.
10 (D) The seventh anniversary of the receipt by the department
11 of the loan recipient's initial loan application.
12 (iii) The interest on the loan is the prime rate plus 2
13 percentage points, as determined by the department, beginning 1
14 year after the first loan under this act.
15 (b) If a loan recipient successfully completes a teacher
16 education program approved by the state board of education at a
17 college or university located in this state and is employed as a
18 teacher by the teacher shortage district that selected or
19 approved of the loan recipient's participation in the program, or
20 by another school district if the teacher shortage district does
21 not offer a teaching position to the loan recipient, the
22 department shall forgive all or part of the obligation under
23 subdivision (a) to repay the loan. The amount of loan
24 forgiveness shall be determined according to subsection (4).
25 (4) The department shall develop a method for calculating
26 the amount of a loan repayment obligation to be forgiven that
27 will result in forgiveness of 1 of the 5 equal annual
1 installments described in subsection (3)(a)(ii) at the end of
2 each of the first 5 school years that the loan recipient is
3 employed as a full-time teacher by the teacher shortage district
4 or other school district described in subsection (3)(b), and
5 shall forgive all or part of the loan repayment obligation for a
6 loan recipient qualifying under subsection (3)(b) using that
7 calculation.
8 Sec. 6. (1) There is created the school employee teaching
9 career loan fund as a separate fund in the state treasury, to be
10 administered by the department. The department may accept money
11 from any source and shall deposit that money and amounts repaid
12 on loans made under this act with the state treasurer, who shall
13 credit the amounts to the fund. The fund shall be used only to
14 provide money for loans made under this act.
15 (2) The state treasurer shall direct the investment of the
16 fund money and shall credit earnings to the fund.
17 (3) Money in the fund at the end of a fiscal year shall not
18 revert to the general fund but shall be carried over in the fund
19 to the next fiscal year.