An Act To Authorize the Provision of Insurance on Student Loans
Maine Legislature, Session 126, LD 0351
Committee: Education and Cultural Affairs
Sponsors: CAIN, FREDETTE, KATZ, LANGLEY, MILLETT, BERRY, JOHNSON, MAKER, POULIOT
Amends: 10 MRSA §962, 10 MRSA §969-A, 10 MRSA §1013, 20-A MRSA §11458, 20-A MRSA §11460, 20-A MRSA §11461, 20-A MRSA §11463

Legislative Document 
No. 351 
S.P. 131 
In Senate, February 12, 2013 
An Act To Authorize the Provision of Insurance on Student Loans 
(EMERGENCY) 
Submitted by the Finance Authority of Maine pursuant to Joint Rule 204. 
Reference to the Committee on Education and Cultural Affairs suggested and ordered 
printed. 
DAREK M. GRANT 
Secretary of the Senate 
Presented by Senator CAIN of Penobscot. 
Cosponsored by Representative FREDETTE of Newport and 
Senators: KATZ of Kennebec, LANGLEY of Hancock, MILLETT of Cumberland, 
Representatives: BERRY of Bowdoinham, JOHNSON of Greenville, MacDONALD of 
Boothbay, MAKER of Calais, POULIOT of Augusta. 
Emergency preamble. Whereas, acts and resolves of the Legislature do not 
become effective until 90 days after adjournment unless enacted as emergencies; and 
Whereas, Maine students and families need more options to finance higher 
education as soon as they can be made available; and 
Whereas, if the availability of student loans is uncertain, students may choose not to 
attend an institution of higher education or may choose to borrow funds that will not 
feature the advantages of student loans insured by the Finance Authority of Maine, and 
students and their families may be adversely affected; and 
Whereas, in the judgment of the Legislature, these facts create an emergency within 
the meaning of the Constitution of Maine and require the following legislation as 
immediately necessary for the preservation of the public peace, health and safety; now, 
therefore, 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  10 MRSA §962, first ¶, as amended by PL 1985, c. 344, §5, is further 
amended to read: 
There is a statewide need to provide enlarged opportunities for gainful employment 
to the people of the State and to insure ensure the preservation and betterment of the 
economy and the general health, safety and welfare of the State and its inhabitants; to 
provide a more healthy environment through the restoration of purity to the air, the water 
or the earth of the State which are fouled with, among other things, industrial and other 
waste materials and pollutants, and to insure ensure the preservation and betterment of the 
living standards and health of its inhabitants; to stimulate a larger flow of private 
investment funds from banks, investment institutions, insurance companies and other 
financial institutions, including pension and retirement funds, to help finance planning, 
development, acquisition, construction, improvement, expansion and placing in operation 
of industrial, manufacturing, recreational, fishing, agricultural, business and natural 
resource enterprises and eligible projects of the State and its political subdivisions; and to 
increase the access of smaller business and, veterans and students pursuing postsecondary 
education to financing at reasonable terms and rates. 
Sec. 2.  10 MRSA §969-A, sub-§3, as enacted by PL 1985, c. 344, §17, is 
amended to read: 
3.  Insure.  Insure or guarantee performance of any loan agreement or other 
obligation, including taking all actions necessary to implement and administer a program 
of insurance for loans to students pursuing postsecondary education; 
Sec. 3.  10 MRSA §1013, sub-§13, as amended by PL 1997, c. 97, §3, is further 
amended to read: 
13.  Higher Education Loan and Loan Insurance Program.  The Higher 
Education Loan and Loan Insurance Program, as established in Title 20-A, chapter 
417-C; 
Sec. 4.  20-A MRSA §11458, as enacted by PL 1991, c. 824, Pt. A, §35, is 
amended to read: 
§11458.  Program established 
There is established the Higher Education Loan and Loan Insurance Program, 
administered by the Finance Authority of Maine, to carry out the purposes of this chapter. 
Sec. 5.  20-A MRSA §11460, as enacted by PL 1991, c. 824, Pt. A, §35, is 
amended to read: 
§11460.  Eligibility 
Loans made or insured under this chapter are available only to or for the benefit of a 
resident of the State or an individual attending an institution of higher education in the 
State who: 
1.  Graduated.  Has graduated from an approved secondary school, matriculated at a 
postsecondary school prior to high school graduation or successfully completed a high 
school equivalency diploma or its equivalent; 
2.  Accepted.  Has been accepted for enrollment as an undergraduate or graduate 
student or is in good standing as an undergraduate or graduate student at an institution of 
higher education in an eligible program of study and has not previously received the 
degree for which the student is enrolled; 
3.  Application.  Has applied for a loan under the program according to schedules 
and procedures and on forms specified by the authority and has provided or caused to be 
provided all information determined necessary by the authority in order to determine 
eligibility; 
4.  Unmet need.  Has been determined by the authority to have an unmet need for 
financial assistance that, if not met, will prevent the student from attending the institution 
of higher education of that student's choice; 
5.  Residency.  Meets the state residency or school attendance requirements that may 
be established by the authority by rule; and 
6.  Loan repayment.  Has been determined by the authority to have a reasonable 
prospect of being able to repay the loan.  In appropriate cases, the authority may allow 
repayments to be deferred and subordinated to repayment of other student loans for such 
period of time as may be necessary for the borrower to be able to afford to repay the loan; 
and. 
7.  Academic standing.  Is maintaining a grade point average of at least 2.0 on a 
scale of 4.0, or the equivalent as determined by the authority, provided, however, that the 
authority may waive the minimum grade point average in the case of a student 
demonstrating special circumstances and a substantial likelihood of improvement. 
Sec. 6.  20-A MRSA §11461, as enacted by PL 1991, c. 824, Pt. A, §35, is 
amended to read: 
§11461.  Higher Education Loan and Loan Insurance Program Fund 
1.  Establishment.  The Higher Education Loan and Loan Insurance Program Fund is 
established to be used by the authority as a nonlapsing, revolving fund for carrying out 
this chapter.  In its discretion, the authority may combine this fund with other funds of the 
authority for accounting purposes and may establish separate accounts for loans and for a 
reserve for loan default payments.  Money in the fund currently not needed to meet the 
obligations of the authority as lender or insurer is deposited with the authority to the 
credit of the fund or may be invested as provided by law. 
2.  Charges and credits.  All amounts received or allocated by the authority for 
deposit to the fund pursuant to this chapter or otherwise must be deposited in the fund.  
All expenses of the authority in carrying out this chapter, including interest, principal and 
fee payments required by loan defaults, must be charged to the fund, except that bond 
proceeds and principal repayments must be used only for loans and not for administrative 
expenses of the program or other current expenditures.  The authority's liability for those 
expenses is limited to the fund. 
Sec. 7.  20-A MRSA §11463 is enacted to read: 
§11463.  Insure student loan payments 
The authority may make commitments and agreements to insure student loan 
payments. 
1.  Loan serviced.  A loan insured by the authority must be serviced as required by 
the authority. 
2.  Compliance.  A loan insured by the authority must be in compliance with the 
student loan insurance credit policy of the authority. 
3.  Other terms.  A loan insured by the authority may be subject to terms other than 
those specified in subsections 1 and 2 as may be required by law or by rule of the 
authority. 
Sec. 8.  Maine Revised Statutes headnote amended; revision clause.  In the 
Maine Revised Statutes, Title 20-A, chapter 417-C, in the chapter headnote, the words 
"higher education loan program" are amended to read "higher education loan and loan 
insurance program" and the Revisor of Statutes shall implement this revision when 
updating, publishing or republishing the statutes. 
Emergency clause.  In view of the emergency cited in the preamble, this 
legislation takes effect when approved. 
SUMMARY 
This bill modifies the Finance Authority of Maine's Higher Education Loan Program 
to specify that the Finance Authority of Maine may provide loan insurance on 
supplemental student loans and renames it the Higher Education Loan and Loan 
Insurance Program.