Virginia Law

Article 3. Student Loan Funds.

As used in this article, unless the context requires a different meaning:

"Fund" means a student loan fund.

"Institution" means a public institution of higher education that has established a student loan fund from appropriations from the general fund of the state treasury for fellowships, scholarships, and loans.

"Student" means a medical student, dental student, intern, resident, or undergraduate student who is entitled to reduced rate tuition charges pursuant to Chapter 5 (§ 23.1-500 et seq.).

1978, c. 745, § 23-38.10:2; 2016, c. 588.

A. Any institution may make loans from its fund only to needy students who might be unable to attend such institution without such loans and who are duly admitted into degree or certificate programs at the institution. Such loans shall be made upon such terms and according to such rules as may be prescribed by the governing board of the institution.

B. In any one academic year, no student shall receive a loan from the fund of an institution that would result in such student owing a net outstanding amount at the end of that year in excess of the tuition and mandatory fees charged by the institution.

C. The rate of interest charged on loans to students from a fund is three percent annually.

1978, c. 745, § 23-38.10:3; 1991, c. 590; 2016, c. 588.

For each loan made from its fund, each institution shall:

1. Include in loan documents for each loan an individual plan for the repayment of principal and interest and the payment of any late fees and clear and detailed information about the collection process for such loan pursuant to the Virginia Debt Collection Act (§ 2.2-4800 et seq.), including information about the agency or entity that is responsible for collection;

2. Establish a process for notifying each student or, in the case of an undergraduate student and as appropriate, the student's parent of any loan payment that is past due no later than (i) 30 days after the payments become past due and (ii) if necessary, the end of the academic term during which such payment becomes past due; and

3. Make every effort to collect each loan and comply with the Virginia Debt Collection Act (§ 2.2-4800 et seq.) with regard to the collection of such loans, provided that, notwithstanding §§ 2.2-4805 and 2.2-4806, the institution may, with the consent of the borrower, modify the terms of any loan for which payments are past due to provide for repayment forbearance on such loan and repayment to commence on a mutually agreed-upon date in the future. Prior to entering into any such agreement, the institution shall provide the borrower with information regarding the effect of a forbearance on the loan amount, including (i) the amount of any additional accumulated principal and interest and (ii) the estimated total amount to be owed upon recommenced payments.

1978, c. 745, § 23-38.10:4; 1988, c. 544; 2016, c. 588; 2018, c. 786.

The Auditor of Public Accounts shall at least biennially audit and exhibit the account of the fund of each institution.

1978, c. 745, § 23-38.10:6; 1991, c. 590; 2016, c. 588.

A. Whenever an institution's fund is inadequate to carry out fully the purpose for which the fund was established, the governing board and chief executive officer of such institution, with the prior written consent and approval of the Governor, are authorized, for the purpose of providing an additional fund, to borrow from such sources and on such terms as may be approved by the Governor an amount not to exceed $25,000 and provide for such extensions or renewals of such loans as may be necessary. Such additional fund shall be used only in making loans to students as provided in this article and for no other purpose.

B. The repayments and interest accretions to the additional fund shall be used insofar as may be necessary to repay the indebtedness of the institution created by the governing board and chief executive officer in establishing such additional fund.

C. Such additional amounts may be borrowed as may be deemed necessary by the governing board and chief executive officer of the institution, with the Governor's approval, but in no event shall the amount of the additional fund, including cash, notes receivable, and all amounts borrowed and not repaid exceed $50,000.

D. Accounts shall be kept and reports rendered for each such additional fund in all respects as required by this article for funds created by appropriations from the general fund of the state treasury and the Auditor of Public Accounts shall biennially exhibit in his report the amount of the additional fund at each institution.

1978, c. 745, § 23-38.10:7; 2016, c. 588.