Report Title:

Occupations

Description:

Prohibits a governmental entity that administers student loans from certifying to a professional or vocational licensing board that a person is in default of a student loan unless the governmental entity obtains a judgment from a court that specifies the exact amount of the default.

HOUSE OF REPRESENTATIVES

H.B. NO.

736

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO PROFESSIONAL AND VOCATIONAL LICENSES.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. During the regular session of 2002, the legislature recognized that individuals who received state or federal student loans for their college degrees also secured something of value that cannot be lost or taken away, and which would give each borrower a continuing, lifelong economic benefit. The legislature also found that student loan recipients must make every effort available to them to honor their financial obligations, which are guaranteed by taxpayer dollars in the event of default. Thus, House Bill No. 2752, House Draft 1, Senate Draft 1, Conference Draft 1, was passed by the legislature and subsequently signed into law by the governor as Act 226, effectively providing for the denial, suspension, or revocation of a state professional or vocational license upon default by the borrower.

The purpose of this Act is to amend Act 226 by requiring the loan administering entity to obtain a court judgment prior to initiating license sanctions. The amendment is necessary to address concerns of a perceived lack of unbiased due process in Act 226, by necessitating proof of default in a Hawaii civil court through substantiating documents.

SECTION 2. Section 436C-2, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) In addition to any other acts or conditions provided by law, the applicable licensing authority shall not renew or reinstate[,] or shall deny, suspend, or revoke the license or application of any person who has been certified by an administering entity as being:

(1) In default or breach of any obligation under any student loan, student loan repayment contract, or scholarship contract; or

(2) At least sixty days past due with payments under a repayment plan.

No administering entity shall certify to the licensing authority that a licensee or applicant is in default or breach of any obligation under any student loan, student loan repayment contract, or scholarship contract, unless the administering entity has obtained a judgment from a district or circuit court in this State that specifies the exact amount of the default. The applicable licensing authority in receipt of the certification shall not renew or reinstate[,] or shall deny, suspend, or revoke the license or application without further review or hearing."

SECTION 3. Section 436B-19.6, Hawaii Revised Statutes, is amended to read as follows:

"[[]§436B-19.6[]] Denial, suspension, or revocation of license for default of student loan or scholarship contract. In addition to any other acts or conditions provided by law, the licensing authority shall not renew or reinstate, or shall deny, suspend, or revoke, any license or application, if the department has received certification from an administering entity pursuant to chapter 436C that the licensee or applicant is in default or breach of any obligation under any student loan, student loan repayment contract, or scholarship contract[,] or has failed to comply with a repayment plan. No administering entity under chapter 436C shall certify to the licensing authority that a licensee or applicant is in default or breach of any obligation under any student loan, student loan repayment contract, or scholarship contract, unless the administering entity has obtained a judgment from a district or circuit court in this State that specifies the exact amount of the default. Unless otherwise provided by law, the licensing authority shall renew, reinstate, or grant the license only upon receipt of an authorization from the administering entity. Chapter 91 and sections 92-17, 436B-18, 436B-20, 436B-21, 436B-24, and 436B-25 shall not apply to a license suspension or denial under this section."

SECTION 4. Section 302A-807, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

"(e) The board shall not renew or reinstate, or shall deny, suspend, or revoke[,] any license, credential, or application, if the board has received certification from an administering entity pursuant to chapter 436C that the licensee or applicant is in default or breach of any obligation under any student loan, student loan repayment contract, or scholarship contract[,] or has failed to comply with a repayment plan. No administering entity under chapter 436C shall certify to the board that a licensee or applicant is in default or breach of any obligation under any student loan, student loan repayment contract, or scholarship contract, unless the administering entity has obtained a judgment from a district or circuit court in this State that specifies the exact amount of the default. Unless otherwise provided by law, the board shall renew, reinstate, or grant the license or credential only upon receipt of an authorization from the administering entity."

SECTION 5. Section 321-15, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) The department shall not renew or reinstate, or shall deny, suspend, or revoke[,] any license or application, if the department has received certification from an administering entity pursuant to chapter 436C that the licensee or applicant is in default or breach of any obligation under any student loan, student loan repayment contract, or scholarship contract[,] or has failed to comply with a repayment plan. No administering entity under chapter 436C shall certify to the department that a licensee or applicant is in default or breach of any obligation under any student loan, student loan repayment contract, or scholarship contract, unless the administering entity has obtained a judgement from a district or circuit court in this State that specifies the exact amount of the default. Unless otherwise provided by law, the department shall grant, renew, or reinstate a license only upon receipt of an authorization from the administering entity."

SECTION 6. Section 431:9-235, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) The commissioner shall not renew or reinstate, or shall deny, suspend, or revoke[,] any license or application, if the commissioner has received certification from an administering entity pursuant to chapter 436C that the licensee or applicant is in default or breach of any obligation under any student loan, student loan repayment contract, or scholarship contract[,] or has failed to comply with a repayment plan. No administering entity under chapter 436C shall certify to the commissioner that a licensee or applicant is in default or breach of any obligation under any student loan, student loan repayment contract, or scholarship contract, unless the administering entity has obtained a judgment from a district or circuit court in this State that specifies the exact amount of the default. Unless otherwise provided by law, the commissioner shall renew, reinstate, or grant a license only upon receipt of an authorization from the administering entity."

SECTION 7. Section 457-9, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) Notwithstanding any provision in this chapter to the contrary, the board shall not renew or reinstate, or shall deny, suspend, or revoke, any license or application, if the board has received certification from an administering entity pursuant to chapter 436C that the licensee or applicant is in default or breach of any obligation under any student loan, student loan repayment contract, or scholarship contract, or has failed to comply with a repayment plan. No administering entity under chapter 436C shall certify to the board that a licensee or applicant is in default or breach of any obligation under any student loan, student loan repayment contract, or scholarship contract, unless the administering entity has obtained a judgment from a district or circuit court in this State that specifies the exact amount of the default. Unless otherwise provided by law, the board shall renew, reinstate, or grant the license only upon receipt of an authorization from the administering entity."

SECTION 8. Section 466J-8, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) The board shall not renew or reinstate, or shall deny, suspend, or revoke[,] any license or application, if the board has received certification from an administering entity pursuant to chapter 436C that the licensee or applicant is in default or breach of any obligation under any student loan, student loan repayment contract, or scholarship contract[,] or has failed to comply with a repayment plan. No administering entity under chapter 436C shall certify to the board that a licensee or applicant is in default or breach of any obligation under any student loan, student loan repayment contract, or scholarship contract, unless the administering entity has obtained a judgment from a district or circuit court in this State that specifies the exact amount of the default. Unless otherwise provided by law, the board shall renew, reinstate, or grant the license only upon receipt of an authorization from the administering entity."

SECTION 9. Section 605-1, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) In addition to other qualifications for licensure and conditions for continuing eligibility to hold a license, applicants for licensure, licensees renewing their licenses, and existing licensees shall be in compliance with any obligation under any student loan, student loan repayment contract, or scholarship contract[,] or shall be in compliance with a repayment plan as provided in chapter 436C. No administering entity under chapter 436C shall certify to the supreme court that a licensee or applicant is in default or breach of any obligation under any student loan, student loan repayment contract, or scholarship contract, unless the administering entity has obtained a judgment from a district or circuit court in this State that specifies the exact amount of the default."

SECTION 10. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 11. This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________