(a)Basic powers. The Alabama Commission on Higher Education (ACHE) is authorized to administer the Alabama Guaranteed Student Loan Program in accordance with the Federal Student Loan Law, and empowered to promulgate such rules, regulations, policies, and procedures as may be reasonable and proper in order to carry out the provisions and purposes of this chapter. Without limiting the generality of the foregoing, the ACHE is authorized and empowered:
(1)To establish regulations deemed necessary to comply with federal regulations and legislation relative to guaranteed student loans and the Federal Student Loan Law.
(2)To establish eligibility criteria for participating postsecondary educational institutions.
(3)To establish reasonable eligibility criteria for the initial and continuing pa
Free access — add to your briefcase to read the full text and ask questions with AI
(a) Basic powers. The Alabama Commission on Higher Education (ACHE) is authorized to administer the Alabama Guaranteed Student Loan Program in accordance with the Federal Student Loan Law, and empowered to promulgate such rules, regulations, policies, and procedures as may be reasonable and proper in order to carry out the provisions and purposes of this chapter. Without limiting the generality of the foregoing, the ACHE is authorized and empowered:
(1) To establish regulations deemed necessary to comply with federal regulations and legislation relative to guaranteed student loans and the Federal Student Loan Law.
(2) To establish eligibility criteria for participating postsecondary educational institutions.
(3) To establish reasonable eligibility criteria for the initial and continuing participation of approved lenders in the student loan program.
(4) To guarantee loans made by approved lenders upon conditions prescribed by ACHE to residents who are attending, have attended or plan to attend eligible institutions in the state or elsewhere, for the purpose of assisting them in meeting educational expenses. ACHE may guarantee 100 percent of the principal and interest on the loans. However, the rate of interest on guaranteed loans may not exceed the annual rate of simple interest prescribed for state student loan guarantee programs pursuant to the Federal Student Loan Law.
(5) To guarantee loans only to students’ parents or to students who attend, have attended or plan to attend an eligible institution.
(6) To enter into contracts and guaranty agreements with approved lenders, state governmental agencies, corporations, and United States governmental agencies, including agreements for federal insurance of losses resulting from death, default, bankruptcy, or total and permanent disability of student borrowers.
(7) To pay the lender an administrative allowance of one percent of the principal amount of the loan up to a maximum of $25.00 per student granted and disbursed a guaranteed student loan in any given year in which such payments are permitted under the Federal Student Loan Law, and funds are available; a year for purposes of this section shall be October 1 through September 30.
(8) To require that any loan guaranteed be disbursed and repaid in the manner and time that ACHE prescribes.
(9) To remove an educational institution’s qualified status upon finding, after reasonable notice and hearing, that the eligible institution fails to meet the standards established by the commission.
(10) To accept, use, and disburse all funds made available to the Alabama Commission on Higher Education for the Alabama Guaranteed Student Loan Program.
(11) To collect an insurance premium, guarantee fee or administrative fee as permitted under the Federal Student Loan Law, and to prudently manage such moneys in accordance with sound financial principles and the Federal Student Loan Law.
(12) To take, hold, and administer, on behalf of the loan program, property, and moneys, and the interest and income derived from them, either absolutely, or in trust. The commission may accept gifts, bequests, devises and loans for the purposes of this program. All fees, receipts, and income of the Alabama Guaranteed Student Loan Program shall be paid over to a bank or banks, as ACHE may direct, and may be expended as authorized by ACHE for support, maintenance, and operation of the Alabama Guaranteed Student Loan Program in accordance with sound financial principles and provisions of the Federal Student Loan Law. No obligation of ACHE for purposes of the loan program or for losses on student loans resulting from death, default, bankruptcy, or total or permanent disability of the student borrowers shall ever (i) create an obligation or a debt of the State of Alabama or any agency or political subdivision thereof other than ACHE or a charge against the credit or taxing powers of the state or any agency or political subdivision thereof other than ACHE, or (ii) create or give rise to any personal liability of any of the commissioners or officers of ACHE, but shall be payable solely from the ACHE “Student Loan Program Fund”.
(13) To enter into contracts, agreements or covenants with, to accept aid, loans and grants from, to cooperate with, to make loan servicing arrangements and other management arrangements with, and to do any and all things not specifically prohibited by this chapter or other applicable laws of the state that may be necessary in order for ACHE to avail itself of the aid, assistance and cooperation of, and any services and benefits available from, any federal agency, the state or any agency, department, instrumentality or political subdivision thereof in furtherance of the purposes of this chapter, or the Federal Student Loan Law, including without limitation, contracts, agreements, covenants, insurance arrangements, or guarantee arrangements, with the federal government or the state, or any agency, department, instrumentality or political subdivision thereof for the guarantee or insurance or purchase or subsidy in any form of student loans or other interest or rights that ACHE may acquire.
(14) To appoint, employ, discharge, and contract with such employees, agents, servicing agents, independent contractors, trustees and depositories, including without limitation, attorneys, accountants, financial experts, fiscal agents and other advisors, insurers, banks and trust companies, consultants and agents, as may in the judgment of ACHE be necessary or desirable, and to fix and pay their compensation and any portion or all of their expenses.
(15) To enter into such management, servicing and other contracts with any governmental agency, nonprofit organization or private business entity as may in the judgment of ACHE be necessary or desirable in order to perform more effectively, efficiently or economically various clerical, safekeeping, loan disbursing, loan servicing, portfolio management, accounting and administrative functions for which ACHE may become responsible in the exercise of the powers conferred upon it by this chapter, including without limitation, contracts for the servicing and collection of any student loans held by ACHE.
(16) To purchase, lease or rent property or equipment in order to carry out ACHE’s duties and responsibilities for the Alabama Guaranteed Student Loan Program. All purchases or lease/rent contracts of supplies and equipment for the Alabama Guaranteed Student Loan Program shall be made or let on a competitive bidding basis, and may be made through the state purchasing agent, or otherwise, as the Executive Director of ACHE may direct. No purchases shall be made from any member of the Legislature, any member of ACHE or any other person holding an office of profit with the State of Alabama.
(17) To appoint advisory councils or committees as needed from among representatives of approved lenders, eligible institutions and other entities concerned with the Alabama Guaranteed Student Loan Program or from the public generally to advise in regard to plans, programs and regulations.
(b) Basic duties. ACHE shall be responsible for the effective implementation and administration of the program. ACHE shall issue public information; promote the availability of the program; design all forms needed for the effective administration of the program; process all applications, certifications of eligibility, and claims; service loans; implement effective collection procedures; promulgate and implement all rules, regulations, policies and procedures; and perform other duties necessary for the effective administration of the program. Without limiting the generality of the foregoing, the basic duties of ACHE also include administration in the following areas:
(1) Funds received under the loan program shall be deposited by ACHE in a separate account known as the “Student Loan Program Fund.” The money remaining in the “Student Loan Program Fund” at the end of a state fiscal year shall not revert to the Special Educational Trust Fund or any other state fund. After consultation with the director of the loan program, ACHE shall invest such funds. The funds invested, and any income earned on accounts so invested, shall become a part of the “Student Loan Program Fund.”
(2) The property, income, obligations, and activities of the program are exempt from all state and local taxation.
(3) Upon default by the borrower on a loan guaranteed under this program, and before the commencement of a suit or other enforcement proceedings upon security for the loan, the holder of the guaranteed loan obligation shall promptly notify ACHE, and ACHE shall draw upon the “Student Loan Program Fund” and shall pay the holder of that loan as soon as the amount is determined. ACHE shall determine the amount of loss in accordance with its rules; however, the amount of loss may not exceed the unpaid balance of the principal amount and the unpaid accrued interest.
Upon payment by ACHE of the guaranteed portion of the loss, ACHE shall be subrogated to the rights of the holder of the obligation upon the insured loan, and ACHE shall be entitled to an assignment of the note or other evidence of the guaranteed loan by the holder.
This section does not preclude any forbearance for the benefit of the student borrower agreed upon by the parties to the guaranteed loan and ACHE.
The holder of a guaranteed loan shall exercise reasonable care and diligence in the making, servicing, and collecting of loans. ACHE may disqualify an approved lender from the guarantee of further loans upon finding, after reasonable notice and hearing, that the lender has substantially failed to exercise reasonable care and diligence in the making and collecting of loans. The disqualification shall continue until ACHE is satisfied that the lender will exercise reasonable care and diligence in the future.