Noia v. McMahon

Issue

The U.S. District Court has enjoined the State of California from applying the regulations which require that non-governmental loans made available to meet current needs be treated as income in computing the grant.

Aids Affected

AFDC, RCA, ECA AND RDP.

Date of Injunction

May 6, 1986.

Retroactivity

The preliminary injunction applies from May 1, 1986 onward. Staff will be notified if further retroactivity is ordered.

Duration

Indefinite at this time. Currently the State is negotiating with the plaintiffs. It appears that an out-of-court agreement will be made and the EAS regulations rewritten accordingly.

Handbook Section Affected

[Refer to “Student Exemption [EAS 44-111.22],” page 27-2]], [Refer to “College Work Study Program [EAS 44-111.24],” page 27-3]] and [Refer to “Independent Living Program (ILP) [EAS-44-111.25],” page 27-3].]

Interim Regulation — Effective May 1, 1986

Non-governmental loans available to meet current needs shall not be counted as income when both of the following are true:

The client submits a WRITTEN agreement which:
- Gives the loan amount.
- States the repayment plan.
- Is signed by both the borrower and lender.
AND
- The agreement clearly states:
- The obligation of the borrower to repay the loan.
- Specified payments amounts.
- The first payment shall be made within 90 days if the receipt of the loan and payments shall continue on a regular basis until the loan is fully repaid.

Non-governmental loans which are designated for purposes other than current need are still exempt and do not require a loan agreement. Other such loans are considered available to meet current needs and will continue to be treated as income if there is not a written loan agreement which meets the criteria above.