Current Status Introducing Body:Senate Bill Number:759 Primary Sponsor:Setzler Committee Number:04 Type of Legislation:GB Subject:Education assistance, revenue bond issuance Residing Body:Senate Current Committee:Education Companion Bill Number:4130 Computer Document Number:JIC/5904SD.93 Introduced Date:19930506 Last History Body:Senate Last History Date:19930506 Last History Type:Introduced, read first time, referred to Committee Scope of Legislation:Statewide All Sponsors:Setzler Type of Legislation:General Bill
Bill Body Date Action Description CMN Leg Involved
____ ______ ____________ ______________________________ ___ ____________
759 Senate 19930506 Introduced, read first time, 04
referred to Committee
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TO AMEND SECTION 59-115-80, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE AUTHORITY TO ISSUE REVENUE BONDS UNDER THE STATE EDUCATION ASSISTANCE ACT, SO AS TO DELETE A REFERENCE TO THE AGGREGATE PRINCIPAL AMOUNT OF SUCH BONDS WHICH MAY BE OUTSTANDING AT ANY TIME AND PROVIDE FOR A PARITY BOND TEST FOR THE ISSUANCE OF ADDITIONAL BONDS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The General Assembly finds:
(1) In 1971 it established the State Education Assistance Authority as a public instrumentality of the State of South Carolina and empowered it to provide financial assistance to residents of South Carolina through the making or guaranteeing of student loans. The authority is governed by its members who are, by statute, the members of the State Budget and Control Board. The authority acts through its contractual agent, the South Carolina Student Loan Corporation, a private nonprofit corporation.
(2) The authority has designated the corporation to serve as a central statewide lender and to date over 266,000 loans have been made to more than 118,000 students and parents.
(3) The administration of this program is totally separate from the loan programs administered by colleges and universities throughout the State whose lending and collection experiences are quite dissimilar. For fiscal year 1992, the authority's default rate was one and eight tenths percent and has remained below two percent for each of the last nine years. Student loans made by the corporation from revenue bond proceeds of the authority are one hundred percent guaranteed by the authority against the death, disability, or default of the student borrower. This guarantee does not in any way represent a pledge of the State's full faith and credit. The guarantee is limited to monies available in a reserve fund maintained by the authority funded through an insurance premium which is deducted from the loan made to each student borrower. On September 30, 1992, there was approximately four million seven hundred thousand dollars in the reserve fund.
(4) The State's guarantee is further backed by a federal program of reinsurance. The amount of this reinsurance relates to the annual default rate on student loans and ranges from one hundred to eighty percent. Unless the State's default rate exceeds five percent in any given year, all loans are reinsured at one hundred percent. Any defaults in excess of five percent, but less than nine percent, are reinsured at ninety percent; all defaults above nine percent are reinsured at eighty percent.
(5) Since the federal program of reinsurance began in 1978, defaults on all loans made by the corporation have always remained below five percent and thus the State has been reimbursed for one hundred percent of all default payments.
(6) In recent years, in an effort to gain the flexibility of entering the tax exempt market at the most advantageous time, the authority has authorized the corporation to arrange for lines of credit from commercial banks.
(7) Also in recent years, the authority has, in connection with an upgrade of its revenue bond rating to "AA", agreed to a parity bond test for the issuance of additional bonds.
(8) For the above reasons, the General Assembly has determined to enact the provisions of Section 2 of this act.
SECTION 2. The first paragraph of Section 59-115-80 of the 1976 Code, as last amended by Act 509 of 1990, is further amended to read:
"Subject to the right to enlarge the authorization to issue revenue bonds, the The General Assembly authorizes the authority to provide for the issuance, at one time or from time to time, of revenue bonds of the authority in an aggregate principal amount outstanding at any time of not exceeding three hundred million dollars for any of its authorized purposes, including the use of a portion of the proceeds of any issue of bonds for the establishment of a reserve for the payment of principal and interest of the bonds. The reserve may be deposited in the sinking fund. Prior to the issuance of a series of bonds, the authority shall establish its compliance with the most restrictive of each parity bond test then imposed by the authority or by any nationally recognized rating agency which maintains a current rating of bonds of the authority. The bonds must be designated, subject to such additions or changes as the authority considers advisable, `State Education Assistance Authority Revenue Bonds, Series ________,' inserting in the blank space a letter or numerals identifying particular series of bonds."
SECTION 3. This act takes effect upon approval by the Governor.