California Financial Code 28000 – (a) Pursuant to the authority contained in Section 1 of Article …
(a) Pursuant to the authority contained in Section 1 of Article XV of the State Constitution, and subject to subdivision (b), educational institutions of collegiate grade are authorized to make loans or forbearances to finance student educational expenses including tuition, room, and board, and other costs of attendance or living at the institution, at rates not to exceed the higher of:
(1) Ten percent per annum.
Terms Used In California Financial Code 28000
- Contract: A legal written agreement that becomes binding when signed.
- Forbearance: A means of handling a delinquent loan. A
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Person: includes any person, firm, partnership, association, corporation, company, limited liability company, syndicate, estate, trust, business trust, or organization of any kind. See California Financial Code 18
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
(2) Five percent per annum plus the rate established by the Federal Reserve Bank of San Francisco on advances to member banks under Sections 13 and 13(a) of the Federal Reserve Act as now in effect or hereafter from time to time amended or, if there is no such single determinable rate of advances, the closest counterpart of this rate as shall be designated by the Commissioner of Financial Institutions of the State of California unless some other person or agency is delegated such authority by the Legislature. The date of determining the applicable rate established by the Federal Reserve bank shall be the 25th day of the month preceding the earlier of the date of execution of the contract to make the loan or forbearance, or the date of making the loan or forbearance.
(b) Where the institution has obtained a loan specifically in order to make loans to finance student educational expenses, the rate of interest shall not exceed the lower of:
(1) The rate determined pursuant to subdivision (a).
(2) One percentage point in excess of the interest rate imposed upon the loan made to the institution, as of the date of execution of the contract to make the student loan to such extent the foregoing creates and authorizes a class of exempt persons pursuant to Section 1 of Article XV of the Constitution.
(c) Solely with respect to loans or forbearances made by educational institutions of collegiate grade to their faculty or staff, secured by real property consisting of a residential dwelling, these institutions are hereby declared to be an exempt class of persons as this term is used in Section 1 of Article XV of the Constitution.
(Amended by Stats. 1996, Ch. 1064, Sec. 618. Effective January 1, 1997. Operative July 1, 1997.)