2016 -- H 7370

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LC003431

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2016

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A N   A C T

RELATING TO EDUCATION - STUDENT LOAN AUTHORITY

     

     Introduced By: Representatives Marcello, Hearn, Serpa, Williams, and Carson

     Date Introduced: January 28, 2016

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 16-62-6, 16-62-9 and 16-62-13 of the General Laws in Chapter 16-

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62 entitled "The Rhode Island Student Loan Authority" are hereby amended to read as follows:

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     16-62-6. Additional general powers. -- In addition to the powers enumerated in ยง 16-62-

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5, the authority shall have the power:

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      (1) To lend money to students and to parents of students and to refinance or consolidate

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eligible loans and education loans previously made to a student or parent by the authority or other

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lending sources for the purpose of assisting the students student in obtaining an education in an

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eligible institution, including refinancing or consolidating obligations previously incurred by a

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student or a parent with other lending sources for this purpose and participating in loans to

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students or parents for this purpose with other lending sources.

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      (2) To make, acquire, take, or purchase eligible loans and education loans with the

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proceeds of bonds or notes or any other funds of the authority available for it or any interest or

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participation in it, in any amount, at any price or prices, and upon any terms and conditions as the

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authority will determine.

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      (3) To sell eligible loans held by the authority to governmental or private financial

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institutions, or to borrow from those financial institutions against the security of these eligible

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loans in any amounts, at any price or prices, and upon any terms and conditions as the authority

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shall determine.

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      (4) To procure insurance of every nature or to enter into agreements with eligible

 

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institutions to protect the authority against losses which may be incurred in connection with its

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property, assets, activities, or the exercise of the powers granted under this chapter.

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      (5) Subject to a contract with the holders of its bonds or notes, or a contract with the

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recipient of an eligible loan, when the authority deems it necessary or desirable, to consent to the

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modification, with respect to security, rate of interest, time of payment of interest or principal, or

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any other term of a bond or note, contract, or agreement between the authority and the recipient

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or maker of a loan, bond, or note holder, or agency or institution guaranteeing the repayment,

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purchasing, or selling of an eligible loan.

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      (6) To engage the services of consultants on a contract basis for rendering professional

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and technical assistance and advice, and to employ attorneys, accountants, financial experts, and

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any other advisors, consultants, and agents that may be necessary in its judgment, and to fix their

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compensation.

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      (7) To contract for and to accept any gifts, grants, loans, funds, property (real or

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personal), or financial or other assistance in any form from the United States or any agency or

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instrumentality of it or from the state or any agency or instrumentality of it or from any other

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source, and to comply, subject to the provisions of this chapter, with the terms and conditions of

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it.

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      (8) To borrow money and to issue bonds and notes and to provide for the rights of the

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holders of these, and to secure the bonds and notes by assignment, pledge, or granting of a

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security interest in its property, including without limitation all or a part of its interest in eligible

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loans, education loans, or agreements with eligible institutions with regard to these for the

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purpose of providing funds to effectuate its purposes under this chapter including the financing of

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eligible loans or education loans or for the purpose of refunding any bonds previously issued.

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      (9) To prescribe rules and regulations deemed necessary or desirable to carry out the

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purposes of this chapter, including without limitation rules and regulations: (i) to ensure

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compliance by the authority with the requirements imposed by statutes or regulations governing

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the guaranty, insurance, purchase, or other dealing in eligible loans by federal agencies,

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instrumentalities, or corporations, and (ii) to set standards of eligibility for educational

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institutions, students, and lenders and to define residency and all other terms as the authority

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deems necessary to carry out the purposes of this chapter.

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      (10) To establish penalties for violations of any order, rule, or regulation of the authority,

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and a method for enforcing the orders, rules, and regulations.

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      (11) To set and collect fees and charges in connection with its eligible loans,

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commitments, and servicing, including without limitation reimbursement of the costs of financing

 

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by the authority, service charges, insurance premiums, and costs incurred by the authority in

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carrying out its corporate purposes.

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      (12) To create and establish any other fund or funds that may be necessary or desirable

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for its corporate purposes.

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     16-62-9. Bonds and notes of the authority. -- (a) The authority shall have the power and

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is authorized to issue its negotiable bonds and notes in one or more series in any principal

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amounts as in the opinion of the authority shall be necessary to provide sufficient funds for

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achieving its purposes, including the payment of interest on bonds and notes of the authority, the

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establishment of reserves to secure these bonds and notes, and the making of all other

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expenditures of the authority incident to and necessary or convenient to carrying out its corporate

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purposes and powers.

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      (b) All bonds and notes issued by the authority may be secured by the full faith and

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credit of the authority, or may be payable solely out of revenues and receipts derived from the

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pledge or assignment of, grant of security interest in, or sale of eligible loans or education loans

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owned by it or any part of it, or out of receipts upon repayment of any eligible loans or education

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loans or any part of these made to students or to parents, legal guardians, or sponsors of students,

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or to institutions or lenders, or upon the undisbursed proceeds of the bonds or notes, or upon

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guaranty payments of principal and interest on eligible loans, or upon interest subsidy payments,

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or upon investment earnings of any of these revenues, receipts, proceeds or payments, or upon

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any other form of security available to the authority for this purpose, all as may be designated in

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the proceedings of the authority under which the bonds or notes shall be authorized to be issued.

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The bonds and notes may be executed and delivered by the authority at any time, may be in any

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form and denominations and of any tenor and maturities, and may be in bearer form or in

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registered form, as to principal and interest or as to principal alone, all as the authority may

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determine.

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      (c) Bonds may be payable in any installments, and at any times not exceeding forty (40)

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years from their date, as shall be determined by the authority.

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      (d) Notes and any renewals of notes may be payable in any installments and at any times

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not exceeding ten (10) years from the date of the original issue of the notes, as shall be

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determined by the authority.

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      (e) Bonds and notes may be payable at any places, whether within or without the state,

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may bear interest at any rate or rates payable at any time or times and at any place or places and

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evidenced in any manner, and may contain any provisions not inconsistent with this section, all as

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shall be provided in the proceedings of the authority under which they shall be authorized to be

 

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issued.

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      (f) There may be retained by provisions made in the proceedings under which any bonds

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or notes of the authority are authorized to be issued an option to redeem all or any part of these, at

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any prices and upon any notice, and on any further terms and conditions as shall be set forth on

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the record of those proceedings and on the face of the bonds or notes.

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      (g) Any bonds or notes of the authority may be sold at any prices, at public or private

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sale, and in any manner as shall be determined by the authority, and the authority shall pay all

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expenses, premiums, and commissions as it shall deem necessary or advantageous in connection

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with the issuance and sale of these.

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      (h) Money of the authority, including without limitation revenues, receipts, proceeds,

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payments, or earnings listed in subsection (b), may be invested and reinvested in any obligations,

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securities, and other investments consistent with the purposes of this chapter including, but not

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limited to, bonds and notes of the authority as shall be specified in the resolutions under which

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the bonds or notes are authorized. In no case shall such investment in bonds or notes of the

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authority constitute an extinguishment of the obligations represented by such bonds and notes.

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      (i) Issuance by the authority of one or more series of bonds or notes for one or more

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purposes shall not preclude it from issuing other bonds or notes for the same purpose or purposes,

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but the proceedings where any subsequent bonds or notes may be issued shall recognize and

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protect a prior pledge or mortgage made for a prior issue of bonds or notes unless in the

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proceedings authorizing the prior issue the right is reserved to issue subsequent bonds or notes on

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a parity with that prior issue.

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      (j) The authority is authorized to issue bonds or notes for the purpose of refunding its

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bonds or notes outstanding, including the payment of any redemption premium on them and any

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interest accrued or to accrue to the earliest or subsequent date of redemption, purchase, or

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maturity of the bonds or notes. The proceeds of bonds or notes issued for the purpose of

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refunding outstanding bonds or notes may be applied, in the discretion of the authority, to the

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purchase, retirement at maturity, or redemption of the outstanding bonds or notes either on their

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earliest or a subsequent redemption date, and may, pending that application, be placed in escrow.

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These escrowed proceeds may be invested and reinvested in obligations of or guaranteed by the

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United States, or in certificates of deposit or time deposits or repurchase agreements, fully

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secured or guaranteed by the state or the United States, or an instrumentality of either, maturing at

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any time or times as shall be appropriate to assure the prompt payment, as to principal, interest,

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and redemption premium, if any, of the outstanding bonds or notes to be refunded. The interest,

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income, and profits, if any, earned or realized on this investment may also be applied to the

 

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payment of the outstanding bonds or notes to be refunded. After the terms of the escrow have

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been fully satisfied and carried out, any balance of the proceeds and interest, income, and profits,

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if any, earned or realized on the investments of these may be returned to the authority for use by it

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in furtherance of its purposes. All these bonds or notes shall be issued and secured and shall be

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subject to the provisions of this chapter in the manner and to the same extent as any other bonds

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or notes issued pursuant to this chapter.

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      (k) The directors, officers of the authority, and other persons executing the bonds shall

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not be subject to personal liability or accountability by reason of the issuance of these.

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      (l) Bonds or notes may be issued under the provisions of this chapter without obtaining

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the consent of any department, division, commission, board, body, bureau, or agency of the state,

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and without any other proceedings, conditions, or things other than those proceedings, conditions,

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or things which are specifically required by this chapter and by the provisions of the resolution

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authorizing the issuance of those bonds or notes or the trust agreement securing this.

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      (m) The authority, subject to any agreements with noteholders or bondholders as may

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then be in force, shall have power out of any funds available for this to purchase bonds or notes of

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the authority, which shall then be cancelled, at a price not exceeding:

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      (1) If the bonds or notes are then redeemable, the redemption price then applicable plus

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accrued interest to the next interest payment date, or

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      (2) If the bonds or notes are not then redeemable, the redemption price applicable on the

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earliest date that the bonds or notes become subject to redemption, plus the interest that would

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have accrued to that date.

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      (n) Whether or not the bonds and notes are of the form and character as to be negotiable

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instruments under the terms of the Rhode Island Uniform Commercial Code, title 6A, the bonds

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and notes are made negotiable instruments within the meaning of and for all of the purposes of

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the Rhode Island Uniform Commercial Code, subject only to the provisions of the bonds and

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notes for registration.

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      (o) If a director or officer of the authority whose signature appears on the bonds, notes,

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or coupons shall cease to be a director or officer before the delivery of those bonds or notes, that

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signature shall be valid and sufficient for all purposes, as if the director or officer had remained in

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office until the delivery.

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     (p) The authority shall also have the power out of any funds available to purchase bonds

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and notes of the authority if the authority determines that such purchases will stabilize or make

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the market for the authority's bonds more efficient. Such purchases shall not result in the

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extinguishment of the debt of the authority represented by such bonds or notes. At the discretion

 

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of the authority, such bonds and notes may be held until the purpose of the purchase has been

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effected and then sold to the market or used as a credit against future redemptions or maturities.

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     16-62-13. Notes and bonds as legal investments. -- The notes and bonds of the authority

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are made securities in which all public officers and bodies of this state and all municipalities and

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municipal subdivisions, including, but not limited to, the authority, all companies and

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associations and other persons carrying on an insurance business, all banks, bankers, trust

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companies, savings banks and savings associations, including savings and loan associations,

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building and loan associations, investment companies, and other persons carrying on a banking

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business, all administrators, guardians, executors, trustees, and other fiduciaries, and all other

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persons who are now or may after this be authorized to invest in bonds or other obligations of the

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state, may properly and legally invest funds, including capital, in their control or belonging to

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them.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO EDUCATION - STUDENT LOAN AUTHORITY

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     This act would specifically empower the Rhode Island Student Loan Authority to

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refinance and consolidate existing eligible loans. It would also authorize the Authority to

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purchase and invest in its own bonds and notes.

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     This act would take effect upon passage.

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