# Title 15 — Education

## Chapter 15-62.1 — Guarantee Loan Program

### § 15-62.1-01. Guarantee student loan programs - Administration - Advisory board.

The Bank of North Dakota, hereinafter called the "agency", is the state agency designated
to administer state guarantee loan programs, as provided in this chapter. The advisory board of
directors to the Bank of North Dakota shall act in an advisory capacity concerning the programs.
The agency, upon recommendation of the advisory board and subject to approval of the
industrial commission, shall expend moneys received and from the interest earned on the
principal balance in the reserve funds established pursuant to this chapter as may be necessary
to implement and administer the programs. The term "student" includes a parent borrower under
this chapter and the term "coinsurance" includes reinsurance.
### § 15-62.1-02. Powers and duties of the agency.

The agency has the following powers and duties under this chapter:
1. To guarantee all loans that satisfy the requirements set forth in title IV, part B, of the
Higher Education Act of 1965 [20 U.S.C. 1001 et seq.; Pub. L. 89-329; 79 Stat. 1236;
Pub. L. 99-498; 100 Stat. 1353; Pub. L. 105-244; 112 Stat. 1581], as amended through
December 31, 1998, upon terms, conditions, and application procedures
commensurate with the federal Higher Education Act of 1965 [20 U.S.C. 1001 et seq.;
Pub. L. 89-329; 79 Stat. 1236; Pub. L. 99-498; 100 Stat. 1353; Pub. L. 105-244;
112 Stat. 1581], as amended through December 31, 1998, if federal coinsurance of
student loans guaranteed by the agency is available. If at any time the agency
determines that student loans made under the terms and conditions of federal
coinsurance programs are no longer adequately serving the needs of North Dakota
students attending postsecondary institutions, or if federal coinsurance is no longer
available, the agency shall notify the industrial commission or its designee. Upon
approval of the industrial commission or its designee, the agency shall guarantee
student loans without federal coinsurance pursuant to rules made by the agency
relating to terms for applicant eligibility in accordance with the provisions of this
chapter. Students whose loans are guaranteed by the agency must be students who
have been accepted for enrollment in postsecondary training or are attending eligible
postsecondary institutions located within or outside this state, and whose loans are for
the purpose of assisting them in meeting their expenses of postsecondary education.
Students who are accepted for enrollment or are attending eligible proprietary or
postsecondary institutions of higher education are eligible to have loans guaranteed by
the agency. The agency shall, by rule, establish minimum qualifications for a person to
be deemed a part-time student for purposes of this chapter.
2. To take, hold, expend, and administer, on behalf of the state from any source any real
property, personal property and moneys, or any interest therein, and the income
therefrom, either absolutely or in trust, for any purpose of the guarantee loan program;
provided, that no guarantee obligation of the agency may be a general obligation of
the state of North Dakota, nor may be payable out of any moneys except those made
available to the agency under this chapter. Nothing in this chapter may be construed to
authorize the agency to borrow funds for any use relating to the administration of the
state guarantee loan programs.
### § 15-62.1-03. Rates of interest permissible for guaranteed loans.

All loans guaranteed by the agency and coinsured by the federal government must bear
interest at rates which are no greater than those provided under the federally coinsured loan
programs. In the event that the agency guarantees student loans without federal coinsurance
pursuant to section 15-62.1-02, the interest rate on such loans may be fixed or variable. Any
prohibition on the capitalization of interest does not apply to loans guaranteed under this
chapter. A loan guaranteed under this chapter may provide for interest which remains unpaid at

the end of any period specified in the loan to be added to the principal amount of the debt and
thereafter accumulate interest.
### § 15-62.1-04. Repayment of loans.

The agency shall establish rules for the repayment, or deferment of repayment, of loans
guaranteed under this chapter which are coinsured by the federal government consistent with
the Higher Education Act of 1965, as amended. The agency shall adopt rules for the repayment,
or deferment of repayment, of loans guaranteed by the agency which are not coinsured by the
federal government.
### § 15-62.1-05. Establishment and maintenance of adequate guarantee funds -

Appropriation.
The agency may enter into an agreement with the federal government for the coinsurance
of loans guaranteed under this program. The agency shall establish and at all times maintain
from funds appropriated under this chapter adequate guarantee reserve funds in special
accounts in the Bank of North Dakota unless required by title IV, part B, of the Higher Education
Act of 1965 [Pub. L. 89-329; 79 Stat. 1236; Pub. L. 99-498; 100 Stat. 1353; Pub. L. 105-244;
112 Stat. 1581; 20 U.S.C. 1001 et seq.], as amended through December 31, 1998, to be
invested elsewhere. The fund for loans that are coinsured by the federal government must be
maintained at a minimum amount equal to the requirements set forth in title IV, part B, of the
Higher Education Act of 1965 [Pub. L. 89-329; 79 Stat. 1236; Pub. L. 99-498; 100 Stat. 1353;
Pub. L. 105-244; 112 Stat. 1581; 20 U.S.C. 1001 et seq.], as amended through December 31,
1998. The fund for loans that are not coinsured by the federal government will be determined by
the agency but may be no less than the Bank of North Dakota historical default rate. Funds
appropriated under this chapter and designated as guarantee agency reserve funds for loans
that are not coinsured by the federal government must be administered separately and
segregated from reserve funds for loans that are coinsured by the federal government. The
securities in which the moneys in the reserve funds may be invested must meet the same
requirements as those authorized for investment under the state investment board. The income
from such investments must be made available for the costs of administering the respective
guarantee loan programs and income in excess of that required to pay the cost of administering
the programs must be deposited in the respective reserve fund that corresponds to the source
of the initial invested funds. The proceeds of reserve funds received from federal, state, or
private sources, for the purpose of guaranteeing loans made to students as provided in this
chapter, are appropriated as a continuing appropriation for the payment of defaulted loans
guaranteed by each respective fund.
### § 15-62.1-06. Procedure on default of guaranteed loan.

Whenever it appears to the satisfaction of the agency that a guaranteed loan made in
accordance with the provisions of this chapter is in default, and the eligible lender has certified
such fact to the agency, the agency shall reimburse the eligible lender making the loan from the
reserve fund to the extent the loan was guaranteed by the fund. Whenever payment of the
guaranteed principal balance of any insured or guaranteed loan is demanded of the agency, the
note and accompanying evidence of the loan must be tendered to the agency in manner and
form to confer good title so that the loan may be collected by the agency as it may determine
according to law. Neither minority nor any statute of limitations may be used as a defense
against collection of any loan through court proceedings.
### § 15-62.1-07. Fees for insurance and other reasonable costs.

The agency may charge reasonable fees for guarantee and insurance to students obtaining
or who have obtained loans under this chapter. The agency may charge up to eighteen percent
of accumulated principal and interest if the loans are in default under section 15-62.1-06. The
fees collected under this section must be available to defray costs of administering the
guarantee loan program. Fees in excess of the amount required to pay the cost of administering
the program must be deposited in the reserve fund. The authority of the agency to charge

reasonable fees under this section applies to all borrowers and cosigners for loans obtained
under this chapter whenever the underlying note was executed and subject to the note providing
for payments of fees and collections costs.
### § 15-62.1-08. Contract with united student aid funds, incorporated, or similar nonprofit

corporation.
The agency is authorized to appoint the united student aid funds, incorporated, or similar
nonprofit corporation, as agent of the state, to assist in performing the administrative functions
of the state under and subject to the terms and provisions of this chapter and to perform such
other duties as may be prescribed by the agency for the proper administration of the guarantee
loan program. The agency shall pay fees to the united student aid funds, incorporated, or similar
nonprofit corporation, as it may determine necessary for the administration of such program. In
the event that the agency has entered into an agreement with united student aid funds,
incorporated, or a similar nonprofit corporation and at a later date determines that it can
administer the program more economically and efficiently than can such nonprofit corporation, it
shall upon proper notice terminate the agreement with such nonprofit corporation.
### § 15-62.1-09. Information system.

The eligible postsecondary educational institutions in the state shall furnish to the agency
and other lending institutions such information as may be necessary to properly administer the
guarantee loan program and the agency shall furnish information in regard to student loan
transactions on a regular basis to such postsecondary educational institutions.
### § 15-62.1-10. Eligibility for participation in federal student loan program.

Repealed by S.L. 2019, ch. 82, § 5.
### § 15-62.1-11. Coordination with federal programs relating to student loans.

Repealed by S.L. 1979, ch. 267, § 6.
### § 15-62.1-12. Assistance to other state agencies - Reports to the board.

Repealed by S.L. 1979, ch. 267, § 6.
### § 15-62.1-13. State scholarship revolving fund - Student loan collections - Uncollectible

loans.
The funds in the state scholarship revolving fund, along with the available interest on such
moneys and subsequent payments of interest and principal received from students, must be
transferred by the Bank of North Dakota to a special fund in the Bank to serve as a reserve fund
for a state guarantee loan program. The Bank shall continue to collect all outstanding loans and
provide such other services as may be necessary to collect such loans and may cease
collection efforts on loans determined uncollectible by action of the industrial commission.
### § 15-62.1-14. Penalty.

Repealed by S.L. 1975, ch. 106, § 673.
### § 15-62.1-15. Student loan consolidation program - Requirements - Authority to expand.

1. The agency shall develop and administer a student loan consolidation program under
which the agency may refinance state, federal, and alternative education loans for
eligible physicians. In order to be eligible under this subsection, a physician must:
a. Be licensed in accordance with chapter 43-17; and
b. Be a resident of and practice in a North Dakota city having a population that does
not exceed four thousand five hundred.
2. The agency may expand the student loan consolidation program to serve individuals
other than those referenced in subsection 1.
