SB278 Alabama 2023 Session

Summary

Primary Sponsor

J.T. WaggonerSenator

Republican

Session

Regular Session 2023

Title

Relating to education; to create the Distressed Institutions of Higher Education Revolving Loan Program to be administered by the State Treasurer; to define "eligible institutions"; to authorize the State Treasurer to establish terms and conditions of loans; to require reporting of contract terms and on the operation of the program; to establish the Distressed Institutions of Higher Education Loan Program Fund in the State Treasury to receive appropriations from the Legislature for funding loans and loan repayments; and to provide for recovery of amounts due.

Summary

The bill creates a Distressed Institutions of Higher Education Revolving Loan Program, run by the State Treasurer, to loan money to financially distressed Alabama colleges and universities and help them stay operating.

What This Bill Does

It establishes a loan program and a dedicated fund in the State Treasury to provide loans to eligible colleges and universities that have been operating for more than 50 years, have community impact, and face financial hardship. The State Treasurer reviews applications, sets loan terms (including collateral, interest, disbursement, and repayment), and administers the loans under written contracts. Loans are funded from the new program fund and must follow annual reporting; no new loans can be issued after January 18, 2027, with remaining funds handled according to the statute.

Who It Affects

• Eligible Alabama higher education institutions that meet the criteria and may apply for loans to maintain operations and replenish their endowment through private gifts.
• State government actors, including the State Treasurer, the Legislature (finance and education committees), the Attorney General, and related financial officers who oversee, fund, administer, and enforce repayment of the loans.

Key Provisions

• Creates the Distressed Institutions of Higher Education Revolving Loan Program to be administered by the State Treasurer.
• Defines 'eligible institution' with criteria: Alabama college/university over 50 years old, significant community impact, financial hardship risking closure, governing body resolution to apply for a loan to replenish endowment via private gifts, and assets sufficient to pledge as collateral.
• Requires applicant institutions to apply on prescribed forms, certify they meet criteria, and undergo Treasurer review of repayment ability.
• Authorizes the State Treasurer to set loan terms (private funds committed before draw, interest rate if any, disbursement timing, repayment terms, collateral) and to award loans.
• Requires a written contract with each loan recipient; breach makes the recipient liable for the unpaid balance; copies of contracts forwarded to legislative and financial officers.
• Imposes annual reporting by December 1 on loan activity and repayments to designated state leaders and committees.
• Creates the Distressed Institutions of Higher Education Loan Program Fund in the State Treasury; fund receives appropriations and loan repayments, with repayments available for program use and unspent funds rolling over to the Education Trust Fund; loan expenses payable from the fund.
• Authorizes the Attorney General to pursue recovery of amounts due; legal actions to be filed in Montgomery County.
• Gives the Treasurer broad authority to carry out the program, including entering into contracts and related instruments.
• No new loans may be authorized after January 18, 2027 (loans issued before that date are allowed); remaining fund balances transfer to the Education Trust Fund on that date.
• Act becomes effective immediately upon passage.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.