(a) The amount of a DREAM loan offered to an individual student by a participating institution shall be determined by the institution, subject to the following provisions:

(1) The loan may not exceed the financial need of the student.

(2) A student may not borrow more than four thousand dollars ($4,000) under this program within a single academic year.

(3) A student may not borrow more than forty thousand dollars ($40,000) in the aggregate under the program.

(4) A student who is enrolled in an undergraduate program may not borrow, as an undergraduate student, more than twenty thousand dollars ($20,000) in the aggregate under the program.

(5) A student who is enrolled in a graduate program may not borrow, as a graduate student, more than twenty thousand dollars ($20,000) in the aggregate under the program.

(6) The proportion of program funding used for instructional programs and for graduate programs shall be determined at the discretion of the participating institution. Priority shall be given to loans for instructional programs.

(b) The interest rate for loans issued under the program shall be the same as the then-current interest rate for undergraduate loans under the William D. Ford Federal Direct Loan Program (20 U.S.C. § 1087a et seq.).

(c) Except as provided in subdivision (d), the standard repayment term for a DREAM loan shall be 10 years. Repayment shall commence following a six-month grace period that begins when a student graduates or ceases to maintain at least half-time enrollment in a degree or certificate program.

(d) On or before January 1, 2020, a participating institution shall adopt procedures allowing a borrower to select an income-based repayment plan for the repayment of a DREAM loan, in accordance with the standards set forth in the William D. Ford Federal Direct Loan Program for income-based repayment plans.

(e) Interest shall not accrue on a DREAM loan during periods of at least half-time enrollment in a degree or certificate program or during the six-month grace period specified in subdivision (c).

(f) Eligibility for deferment, discharge, or forbearance of a DREAM loan shall be determined by the participating institution in accordance with the standards set forth in the William D. Ford Federal Direct Loan Program.

(g) On or before January 1, 2024, a participating institution shall establish loan forgiveness options for borrowers who receive a DREAM loan with similar standards as those set forth in the Federal Perkins Loan Program.

(h) (1) A borrower shall qualify for administrative relief consistent with the standards set forth in the Federal Direct Loan Program during periods of national emergency declared by the President of the United States.

(2) A borrower shall qualify for any state of emergency administrative forbearance on student loans that is provided by the Governor by executive order or the participating institution.

(3) A borrower shall be granted administrative relief for 90 days if the borrower lives or works where a natural disaster has occurred upon notification by the borrower, a member of the borrower’s family, or another reliable source that the borrower has been affected by the natural disaster.

(i) Participating institutions shall use a common promissory note, approved by the Treasurer, to issue DREAM loans.

(Amended by Stats. 2022, Ch. 484, Sec. 2. (AB 2004) Effective January 1, 2023.)