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28000-28001

FINANCIAL CODE
SECTION 28000-28001

28000.  (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.
   (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.



28001.  This division shall not apply to community colleges.