I. The Trustees of the Institution have authorized interest-free loans to qualified employees for the undergraduate college education of their children, subject to certain conditions which are set forth below:

II. Loans will be made on approval of Human Resources to regular employees who are expected to continue their employment during the repayment period of the loan.

III. Loans will be available for undergraduate attendance at accredited colleges or at recognized technical and vocational schools beyond the high school level which offer a broadly-based training in a trade or technology.

IV. The loans will be available to eligible employees on behalf of their biological and legally adopted children as well as stepchildren claimed as dependents on their income tax returns.

V. Applications are to be submitted to the Assistant Controller.

VI. In applying for a loan, an employee must sign an agreement providing for payroll deduction in an amount calculated to repay each principal installment in five years (130 pay periods). No interest will be charged by the Institution. However, if the loan, or combination of other below market interest rate Institution loans, exceeds $10,000, the IRS requires that the imputed interest be reported as income.

VII. The loans will be available annually for not more than four years in amounts up to one-half of the tuition and fees. Total loans to an employee will not exceed an outstanding balance of $42,400 per family. The maximum outstanding balance shall in no case exceed 33 1/3% of the employee's current regular annual salary.

VIII. Loan maximum will be adjusted annually based upon the Higher Education Price Index (HEPI), effective September 1.

IX. After the loan has been approved, a note will be signed and executed by the employee.

X. Following the approval, the Controller will issue the loan after receipt of:

a. Copy of the approval;
b. Properly executed note;
c. Signed authorization for payroll deductions.

XI. If repayment is not completed in the five-year period as provided in paragraph VI, the subsequent interest rate will be at the going commercial bank rate for similar loans.

XII. If the employee leaves the Institution, the loan becomes due and payable immediately. An extension after termination (including retirement), if approved by the Vice President for Finance & Administration, will bear interest at a rate commensurate with that used by commercial banks for similar loans.

XIII. Any loans outstanding to Regular employees at the time of death will be forgiven by the Institution. Based on tax rules issued by the IRS, if the employer forgives a loan, the unearned amount becomes wages subject to employment taxes and wage reporting.