Student Debt Protection Act

This is a assignment my son completed as a part of his participation in a program called TeenPact.  TeenPact's purpose is to "to train youth to understand the political process, value their liberty, defend their Christian faith and engage the culture at a time in their lives when, typically, they do not care about such things."

By:  Tallon Cannon

House Bill # LBB-2001

A BILL

TO BE ENTITLED

AN ACT

Student Debt Protection Act

Purpose:  To educate students and enact responsible lending guidelines to students seeking state/federal loans for College and post-graduate course work.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH CAROLINA

Section 1.  For the purpose of this act, “student’s” refers to any individual seeking to borrow money from federal or state entities for the purpose of furthering their academic progress at an accredited higher education institution.

Section 2.  It is unlawful for a student to borrow greater than 50% of their projected annual compensation.  Projections of annual compensation are determined by the students declared degree pursuit, and solidified by salary surveys from actual employers in that field.   Each state will determine the appropriate salary for its state, based on the surveys from that state.   

Section 3.  Students must make satisfactory progress each semester to be eligible for receiving state/federal loan proceeds the next year.  Satisfactory progress means that the student has progressed in their declared degree so as to be able to graduate within five academic years from starting the degree.   If a student fails to make satisfactory progress the loan becomes due in equal installments six months after withdraw from school over the course of 84 months.

Section 4.  Student loan proceeds are divided equally among four or five academic years, (students choice) up to 50% of the students projected salary from the degree they are pursuing.  Projected salaries are updated every other year in odd years.   The maximum amount a student is eligible to borrow in any one year on the four year plan is 12.5% of their projected salary from their degree, and 10% on the five year plan.

Section 5.  All students who obtain state/federal loans are required to complete a one-college credit course in personal finance and safe debt practices.  This course is provided free of charge, at the college/university expense.  The student must pass this class the first semester they are enrolled in a higher education institution.  Students who do not pass this class are ineligible for further state/federal loans.

Section 6.  Upon graduation students must begin repayment 7 months after their graduation date.  Students who begin repayment within 2 months of graduation and continue making monthly payments for six consecutive years receive a 4.75% one time loan reduction.  Students who repay their loan prior to month 72 will receive a 6.75% one time loan reduction.  Maximum loan reduction cannot exceed 10%.  All loans must be repaid within seven years of the student’s graduation date or the loan becomes default.  Payments will be equally divided over 84 months at a fixed interest rate set at the time of lending.

Section 6.  All laws or parts of laws in conflict with this act are herby repealed.

Section 7.  This act shall become law July 30, 2018.