House Bill No. 180
Introduced By bohlinger
A Bill for an Act entitled: An Act providing for the suspension of state-issued licenses of debtors who have defaulted on a guaranteed student loan and who have refused to enter into a repayment agreement with the Montana student loan program; amending section
20-26-1101, MCA; and providing for voiding the two-thirds vote requirement.
Be it enacted by the Legislature of the State of Montana:
Section 1. Notice of intent to suspend license. (1) An agency may issue a notice of intent to suspend a license when a delinquency in repayment of a guaranteed student loan occurs.
(2) The notice must:
(a) be served upon the debtor personally or by certified mail with return receipt requested; and
(b) state that the debtor's license will be suspended 90 days after service unless within that time the debtor:
(i) pays the entire debt stated in the notice; or
(ii) enters into a payment plan approved by the agency.
Section 2. Hearing -- order suspending license. (1) To show cause why suspension of a license under [section 1] is inappropriate, the debtor may, within 30 days of the date of service of the notice, request a hearing from the agency.
(2) The agency, upon receipt of a request for hearing from a debtor, shall schedule a hearing to determine whether suspension of the debtor's license is appropriate. The debtor's license may not be suspended until a determination is reached following the hearing.
(3) The only issues that may be determined in a hearing under this section are:
(a) the amount of the debt, if any;
(b) whether the debtor is delinquent; and
(c) whether the debtor has entered into a payment plan.
(4) If a debtor fails to respond to a notice of intent to suspend a license, fails to timely request a hearing, or fails to appear at a regularly scheduled hearing, the debtor's defenses, objections, or request for a payment plan may be determined to be without merit and the agency shall enter a final decision and order accordingly.
(5) If the agency determines that the debtor is delinquent or has not entered into a payment plan, the agency shall issue an order requesting suspension of the debtor's license and order the debtor to refrain from engaging in the licensed activity. The agency shall send a copy of the order requesting suspension of a license to the licensing authority and the debtor.
(6) The debtor may appeal any finding of the agency to the commissioner of higher education and to the board, and any appeal is governed by the appeals procedures of the board. An action to suspend the license must be stayed during the time of appeal.
(7) A determination made by the agency under this section is independent of any proceeding of the licensing authority to suspend, revoke, deny, terminate, or renew a license.
Section 3. Suspension, denial, and nonrenewal of licenses. (1) Upon receipt of an order suspending a license, a licensing authority shall implement the suspension of the license by:
(a) determining if it has issued a license to the debtor whose name appears on the order;
(b) entering the suspension on the appropriate records;
(c) reporting the suspension as appropriate; and
(d) if required by law, demanding surrender of the suspended license.
(2) An order issued by the agency suspending a license must be processed by the licensing authority without any additional review or hearing concerning suspension of the license.
(3) Notwithstanding the provisions of any other law establishing terms of suspension, revocation, denial, termination, or renewal of a license, an order issued by the agency suspending a license must be implemented by the licensing authority and continues until the agency advises the licensing authority that the suspension has been stayed or terminated.
(4) If a license is suspended, any funds paid by the debtor to the licensing authority for costs related to issuance, renewal, or maintenance of a license may not be refunded to the debtor.
(5) Unless an order staying suspension of a license is in effect, a debtor who continues to engage in the business, occupation, profession, or other licensed activity while the debtor's license is suspended under this section is guilty of a misdemeanor and upon conviction shall be punished by a fine of not less than $250 or more than $500 or by imprisonment in the county jail for a term not to exceed 6 months, or both. Upon conviction of a second or subsequent violation, the debtor shall be punished by a fine of not less than $500 or more than $2,000 or by imprisonment in the county jail for a term not to exceed 1 year, or both. The agency or the licensing authority may elect the remedy under this section or any other remedy provided for engaging in a licensed activity without a license or while the license is suspended.
(6) The licensing authority is exempt from liability to the licensee for activities conducted in compliance with [sections 1 through 7].
(7) The licensing authority has no jurisdiction to modify, remand, reverse, vacate, or stay the order of the agency suspending a license.
(8) To the extent that inconsistencies exist between [sections 1 through 7] and the procedural requirements for suspension of a license issued by the licensing authority, [sections 1 through 7] supersede those requirements.
Section 4. Nondisciplinary suspension for failure to pay on defaulted student loan. Notwithstanding any other provision of this title, the agency has the authority to suspend a license under [sections 1 through 7] without any action by the licensing authority. The licensing authority shall, upon receipt of an order issued by the agency, suspend the license of the named individual. The suspension must be nondisciplinary for professional or occupational licenses, and the provisions of 2-4-631 do not apply.
Section 5. Stay of suspension of license -- payment plan -- hardship. (1) A debtor may, at the time of the hearing conducted under [section 2] or at any time after the hearing, petition the agency for an order staying suspension of the license.
(2) The agency shall consider the debtor's petition for a stay separately from any determination on whether suspension of a license is appropriate.
(3) The agency may stay suspension of a license upon a showing that suspension or continued suspension of a license would create a significant hardship to the debtor, to the debtor's employees, to legal dependents residing in the debtor's household, or to persons, businesses, or other entities served by the debtor.
(4) A stay terminates upon:
(a) termination of the circumstances upon which a significant hardship is based;
(b) failure by the debtor to abide by the terms and conditions of a payment plan; or
(c) the date of termination, if any, provided in the order staying suspension of the license.
(5) If the licensing authority has been notified of an order suspending a license, the agency shall send a copy of any order staying or reinstating suspension of the license to the licensing authority and the debtor.
(6) (a) Upon receipt of an order staying or reinstating suspension of the license, the licensing authority shall:
(i) enter the information on appropriate records;
(ii) report the action as appropriate; and
(iii) as appropriate, demand surrender of the suspended license or return the reinstated license.
(b) Further action by the licensing authority is not necessary to implement the stay or reinstatement of suspension of the license.
Section 6. Termination of order to suspend license. (1) When the agency determines that the debt is paid in full or the debtor has entered into a payment plan approved by the agency, the agency shall terminate the order suspending the license. The agency shall send a copy of the order terminating the suspension of the license to the licensing authority and the debtor.
(2) Entry of an order terminating suspension of a license does not limit the ability of the agency to issue a new order suspending the license of the same debtor in the event of another delinquency.
Section 7. Fees. A licensing authority subject to this part may charge the debtor a fee to cover the administrative costs incurred by the licensing authority under this part. Fees collected pursuant to this section by a licensing authority with a state special revenue fund must be deposited in the state special revenue fund for the use of the licensing authority to pay the costs of administering [sections 1 through 7]. Fees collected pursuant to this section by a licensing authority without a state special revenue fund must be deposited in the general fund.
Section 8. Section 20-26-1101, MCA, is amended to read:
"20-26-1101. Definitions. As used in this part, unless the context clearly indicates otherwise, the following definitions apply:
(1) "Agency" means the entity designated by the board to administer student loans.
(1)(2) "Board" means the board of regents of higher education. (2) "Corporation" means the corporation designated by the board to administer student loans.
(3) "Council" means the guaranteed student loan advisory council established in 2-15-1520.
(4) "Delinquency" means the failure of a debtor to abide by the terms of payment on a promissory note or other obligation created in return for an educational student loan, which failure has existed for at least 6 months and has resulted in an arrearage equal to or greater than six monthly payments called for by the note or obligation.
(4)(5) "Eligible educational institution" means any institution approved by the United States commissioner of education as
eligible to participate in the guaranteed student loan program pursuant to Title IV of the Higher Education Act of 1965, as
amended. (5)(6) "Guaranteed student loan program" means the program established by the board pursuant to this part.
(7) "License" means a license, certificate, registration, or authorization issued by an agency of the state of Montana granting a person a right or privilege to engage in a business, occupation, or profession or any other privilege that is subject to suspension, revocation, forfeiture, or termination by the licensing authority prior to its date of expiration.
(8) "Licensing authority" means any department, division, board, agency, or instrumentality of this state that issues a license.
(9) "Order suspending a license" means an order issued by the agency to suspend a license. The order must contain the name of the debtor, the type of license, and the social security number of the debtor.
(10) "Payment plan" includes but is not limited to a plan approved by the agency that provides sufficient security to ensure compliance with Title IV of the Higher Education Act of 1965, as amended, and that incorporates voluntary or involuntary income withholding or a similar plan for periodic payment of the debt outstanding."
Section 9. Two-thirds vote required. Because [section 3] limits governmental liability, Article II, section 18, of the Montana constitution requires a vote of two-thirds of the members of each house of the legislature for passage.
Section 10. Codification instruction. [Sections 1 through 7] are intended to be codified as an integral part of Title 20, chapter 26, part 11, and the provisions of Title 20, chapter 26, part 11, apply to [sections 1 through 7].
Section 11. Required vote -- voidness. If the two-thirds vote required by [section 9] is not obtained, then [sections 3(6) and 9] of [this act] are void.