A BILL TO BE ENTITLED
AN ACT to transfer the scholarship loan fund for prospective teachers from the department of public instruction to the state education assistance authority and to appropriate funds for additional scholarship loans.
The General Assembly of North Carolina enacts:
SECTION 1. The Scholarship Loan Fund for Prospective Teachers is transferred from the Department of Public Instruction to the State Education Assistance Authority.  This transfer shall have all of the elements of a Type I transfer, as defined in G.S. 143A‑6.
SECTION 2.  Article 32A of Chapter 115C of the General Statutes is recodified as G.S. 116‑209.34 (G.S. 115C‑468(a) through (c) become G.S. 116‑209.34(a) through (c); G.S. 115C‑469 becomes G.S. 116‑209.34(d); G.S. 115C‑470 becomes G.S. 116‑209.34(e); G.S. 115C‑471 becomes G.S. 116‑209.34(f); and G.S. 115C‑472.1 becomes G.S. 116‑209.34(g).)
SECTION 2.  G.S. 116‑209.34 reads as rewritten:
"§ 116-209.34. Scholarship Loan Fund for Prospective Teachers.
(a)	There is established a revolving fund known as the "Scholarship Loan Fund for Prospective Teachers". The purpose of the fund is to provide scholarship loans to qualified individuals who are pursuing college degrees to become teachers. The State Education Assistance Authority shall administer the Fund.(b)	The State Education Assistance Authority, in consultation with the State Board of Education, shall develop criteria for awarding scholarship loans from the Fund. These criteria shall include:
(1)	Measures of academic performance including grade point averages, scores on standardized tests, class rank, and recommendations of guidance counselors and principals. 
(2)	The geographic areas or subjects of instruction in which the demand for teachers is greatest;
(3)	To the extent practical, an equal number of scholarships shall be awarded in each of the State's Congressional Districts.
(4)	Any additional criteria that the State Education Assistance Authority considers necessary to administer the Fund effectively, including:
a.	Consideration of the appropriate numbers of minority applicants and applicants from diverse socioeconomic backgrounds to receive scholarships pursuant to this section.
b.	Consideration of the commitment an individual applying to receive funds demonstrates to the profession of teaching.
(c)	The State Education Assistance Authority may earmark up to twenty percent (20%) of the funds available for scholarship loans each year for awards to applicants who have been employed for at least one year as teacher assistants and who are currently employed as teacher assistants. Preference for these scholarship loans shall be given:
(1)	First to applicants who worked as teacher assistants for at least five years and whose positions as teacher assistants were abolished. Of these applicants, preference shall be given to applicants who have been admitted to an approved teacher education program in North Carolina; and
(2)	Then to applicants who already hold a baccalaureate degree or who have already been formally admitted to an approved teacher education program in North Carolina. 
(d)	The State Education Assistance Authority may further earmark a portion of these funds each year for two‑year awards to applicants who have been employed for at least one year as teacher assistants to attend community colleges to get other skills of use in public schools or to get an early childhood associate degree. The provisions of this section shall apply to these scholarship loans except that a recipient of one of these scholarship loans may receive credit upon the amount due on the loan as provided in subdivision (e)(5) of this subsection or by working in a nonteaching position in the North Carolina public schools or by working in a licensed child care center in North Carolina.
	
(e)	The State Education Assistance Authority, in consultation with the State Board of Education, shall develop criteria for the administration of the Scholarship Loan Fund for Prospective Teachers. These criteria shall include the following:
(1)	 The loan amount shall be not more than four thousand dollars ($4,000) per academic school year for a maximum of four years for applicants who are pursuing a college degree to become a teacher.  The loan amount shall be not more than one thousand two hundred dollars ($1,200) per academic school year for applicants who are teacher assistants to attend community college.
(2)	An applicant shall be a resident of North Carolina. For purposes of this section, residency shall be determined by the same standard as residency for tuition purposes pursuant to G.S. 116‑143.1.
(3)	All scholarship loans shall be evidenced by notes made payable to the Authority that bear interest at the rate of ten percent (10%) per year, beginning September 1 after graduation, or immediately after termination of the scholarship loan, whichever is earlier.
(4)	A scholarship loan may be terminated by the recipient withdrawing from school or by the recipient not meeting the standards set by the Authority. All terminated scholarships shall be regarded as vacant and subject to being awarded to other eligible persons.
	
(5)	The Authority shall forgive a four‑year loan if, within seven years after graduation, the recipient teaches for four years at a North Carolina public school or at a school operated by the United States government in North Carolina. The Commission shall also forgive a four‑year loan if, within seven years after graduation, the recipient teaches for three consecutive years, or for three years interrupted only by an approved leave of absence, at a North Carolina public school that is in a low‑performing school system or a school system on warning status at the time the recipient accepts employment with the local school administrative unit.  For loans of less than four years, the Authority shall forgive one year for each year the recipient teaches, within four years of graduation, at a North Carolina public school or a school operated by the United States government in North Carolina. (6)	 The Authority may forgive or reduce any loan payment if the Authority considers that extenuating circumstances exist that would make teaching or repayment impossible.
(7) 	 The Authority shall ensure that all repayments, including the accrued interest, are placed in the Fund.
	
(f)	The State Education Assistance Authority, in consultation with the State Board of Education, shall adopt rules to implement this section."
SECTION 3.  There is appropriated from the General Fund to the Scholarship Loan Fund for Prospective Teachers the sum of four million two hundred ninety‑eight thousand dollars ($4,298,000) for the 2005‑2006 fiscal year and the sum of six million four hundred eighty‑two thousand five hundred dollars ($6,482,500) for the 2006‑2007 fiscal year to increase the scholarship amount for holders of existing scholarships and to provide an additional 800 scholarship loans a year from the Fund.
SECTION 4.  This act becomes effective July 1, 2005.