S.B. No. 511
AN ACT
1-1 relating to the student loan program administered by the Texas
1-2 Higher Education Coordinating Board.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subchapter D, Chapter 52, Education Code, is
1-5 amended by adding Section 52.501 to read as follows:
1-6 Sec. 52.501. DEFINITIONS. In this chapter:
1-7 (1) "Board" means the Texas Higher Education
1-8 Coordinating Board.
1-9 (2) "Board interest and sinking fund" means an
1-10 interest and sinking fund established by the board under Section
1-11 52.03 of this code.
1-12 (3) "Board student loan fund" means a student loan
1-13 fund established by the board under Section 52.04 of this code.
1-14 (4) "Bond" means a general obligation bond issued by
1-15 the board under Article III, Section 50b, 50b-1, 50b-2, or 50b-3,
1-16 of the Texas Constitution.
1-17 (5) "Student loan program" means the student loan
1-18 program administered by the board under this chapter.
1-19 SECTION 2. Section 52.01, Education Code, is amended to read
1-20 as follows:
1-21 Sec. 52.01. ADMINISTRATION. The Texas Higher Education
1-22 Coordinating Board, <Texas College and University System,> or its
1-23 successors, shall administer the student loan program authorized by
1-24 this chapter pursuant to Article III, Sections <Section> 50b,
2-1 50b-1, 50b-2, and 50b-3, of the Texas Constitution. Personnel and
2-2 other expenses required to properly administer this chapter shall
2-3 be funded by:
2-4 (1) <provided in> the general appropriations acts; or
2-5 (2) any other source of revenue received by the board
2-6 in connection with the operation of the student loan program.
2-7 SECTION 3. Subchapter A, Chapter 52, Education Code, is
2-8 amended by adding Section 52.011 to read as follows:
2-9 Sec. 52.011. ADMINISTRATIVE EXPENSES FROM REPAYMENT OF
2-10 LOANS. If there are insufficient funds from Sections 52.01(1) and
2-11 (2) of Section 52.01 to cover annual costs to administer the
2-12 program, revenues received from repayment of student loans issued
2-13 under this chapter may be used to administer this chapter, provided
2-14 that the amount used from loan repayments may not exceed 0.5
2-15 percent of the total outstanding student loans. This section
2-16 expires September 1, 1995.
2-17 SECTION 4. Subchapter A, Chapter 52, Education Code, is
2-18 amended by adding Sections 52.03 and 52.04 to read as follows:
2-19 Sec. 52.03. BOARD INTEREST AND SINKING FUNDS. (a) The
2-20 board by resolution may establish one or more interest and sinking
2-21 funds as accounts in the state treasury.
2-22 (b) A board interest and sinking fund established under this
2-23 section consists of deposits made by the board as provided by this
2-24 chapter.
2-25 (c) A board interest and sinking fund established under this
2-26 section may be used for any purpose related to the student loan
2-27 program.
3-1 (d) The board by resolution may create and provide the terms
3-2 of administration and use of one or more accounts in a board
3-3 interest and sinking fund established under this section.
3-4 Sec. 52.04. BOARD STUDENT LOAN FUNDS. (a) The board by
3-5 resolution may establish one or more board student loan funds as
3-6 accounts in the state treasury.
3-7 (b) A board student loan fund established under this section
3-8 consists of deposits made by the board as provided by this chapter.
3-9 (c) A board student loan fund established under this section
3-10 may be used for any purpose related to the student loan program.
3-11 (d) The board by resolution may create and provide the terms
3-12 of administration and use of one or more accounts in a board
3-13 student loan fund established under this section.
3-14 SECTION 5. Section 52.11, Education Code, is amended by
3-15 adding Subsection (n) to read as follows:
3-16 (n) This section applies only to bonds issued under Article
3-17 III, Section 50b, of the Texas Constitution.
3-18 SECTION 6. Section 52.16, Education Code, is amended to read
3-19 as follows:
3-20 Sec. 52.16. PROCEEDS FROM BOND SALE. All proceeds from the
3-21 sale of bonds authorized by Article III, Section 50b, 50b-1, or
3-22 50b-2 of the Texas Constitution shall be deposited in the state
3-23 treasury in the Texas Opportunity Plan Fund.
3-24 SECTION 7. Section 52.17, Education Code, is amended to read
3-25 as follows:
3-26 Sec. 52.17. INTEREST AND SINKING FUNDS <FUND>. (a) Each
3-27 fiscal year a sufficient portion of the funds received by the board
4-1 as repayment of student loans granted under this chapter, <and> as
4-2 interest on the loans, and as other available funds relating to the
4-3 student loan program shall be deposited in the state treasury in
4-4 the Texas college interest and sinking fund or a board interest and
4-5 sinking fund <College Student Loan Bonds Interest and Sinking Fund,
4-6 referred to in this chapter as the interest and sinking fund,> to
4-7 pay the interest and principal coming due during the ensuing fiscal
4-8 year and to establish and maintain a reserve in the interest and
4-9 sinking fund equal to the average annual principal and interest
4-10 requirements of all outstanding bonds issued under this chapter
4-11 that are secured by funds in the Texas college interest and sinking
4-12 fund or a board interest and sinking fund.
4-13 (b) If in any year funds are received in excess of the
4-14 foregoing requirements, then the excess may <shall> be:
4-15 (1) deposited in the Texas Opportunity Plan Fund, the
4-16 student loan auxiliary fund, or a board interest and sinking fund;
4-17 (2) used to pay any costs of the board related to the
4-18 operation of the student loan program;
4-19 (3) used for any lawful purpose related to the student
4-20 loan program; or
4-21 (4) <and may be> used for the same purposes and upon
4-22 the same terms and conditions prescribed for the proceeds derived
4-23 from the sale of the bonds <Texas College Student Loan Bonds>.
4-24 (c) In the event that funds received by the board in any
4-25 fiscal year as repayment of student loans and as interest on the
4-26 loans are insufficient to pay the interest coming due and the
4-27 principal maturing on the bonds during the ensuing fiscal year, the
5-1 state treasurer shall transfer into the Texas college interest and
5-2 sinking fund and each board interest and sinking fund out of the
5-3 first money coming into the treasury, which is not otherwise
5-4 appropriated by the constitution, an additional amount sufficient
5-5 to pay the interest coming due and the principal maturing on the
5-6 bonds during the ensuing fiscal year.
5-7 (d) The resolution authorizing the issuance of the bonds may
5-8 provide for the deposit, from bond proceeds, of not more than 24
5-9 months' interest, and may provide for the use of bond proceeds as a
5-10 reserve for the payment of principal of and interest on the bonds.
5-11 (e) Amounts paid to the board by the federal Lender's
5-12 Special Allowance program may be deposited in the Texas college
5-13 interest and sinking fund, a board interest and sinking fund, or
5-14 used for the administration of student loan and grant programs and
5-15 the Teacher Loan Program and Future Teacher Loan Program authorized
5-16 under House Bill 72, 68th Legislature, 2nd Called Session, 1984, or
5-17 other programs administered by the board as specified by the
5-18 legislature in the General Appropriations Act.
5-19 (f) With respect to loans granted under this chapter, the
5-20 board shall file semiannually with the bond review board
5-21 established under Chapter 1078, Acts of the 70th Legislature,
5-22 Regular Session, 1987 (Article 717k-7, Vernon's Texas Civil
5-23 Statutes), a report on the performance of the loans, <and> the
5-24 Texas college interest and sinking fund, and each board interest
5-25 and sinking fund. The bond review board shall review the reports
5-26 filed by the board under this subsection to assess the performance
5-27 of the loans under this chapter, <and> the Texas college interest
6-1 and sinking fund, and each board interest and sinking fund. The
6-2 filing dates and the contents of the reports must comply with any
6-3 rules adopted by the bond review board.
6-4 SECTION 8. Section 52.19, Education Code, is amended to read
6-5 as follows:
6-6 Sec. 52.19. INVESTMENT OF FUNDS. All money in the Texas
6-7 college <reserve portion of the> interest and sinking fund and in
6-8 each board interest and sinking fund, including the reserve
6-9 portion, and all money in the Texas Opportunity Plan Fund and in
6-10 the student loan auxiliary fund in excess of the amount necessary
6-11 for student loans, and all money in each board student loan fund
6-12 shall be invested by the state treasurer in the investments
6-13 prescribed by board resolution. The board shall furnish to the
6-14 state treasurer a copy of the resolution prescribing authorized
6-15 investments. The board may sell any instruments owned in the Texas
6-16 college interest and sinking fund, a board interest and sinking
6-17 fund, <or in> the Texas Opportunity Plan Fund, the student loan
6-18 auxiliary fund, or a board student loan fund at the prevailing
6-19 market price. Income from these investments may <shall> be
6-20 deposited in any of those funds <the interest and sinking fund>.
6-21 SECTION 9. Subchapter B, Chapter 52, Education Code, is
6-22 amended by adding Section 52.20 to read as follows:
6-23 Sec. 52.20. STUDENT LOAN NOTES. (a) Promissory notes
6-24 evidencing student loans made by the board with proceeds from bonds
6-25 may be deposited and held in any fund as directed by the board
6-26 resolution that authorized the issuance of the bonds.
6-27 (b) The board may pledge and grant a security interest in
7-1 all or any portion of those promissory notes to any person to
7-2 further secure the payment of principal and interest on bonds
7-3 issued under this chapter or of obligations under any contracts
7-4 entered into by the board relating to the issuance of a series of
7-5 bonds.
7-6 SECTION 10. Subsection (a), Section 52.36, Education Code,
7-7 is amended to read as follows:
7-8 (a) The board shall from time to time fix the interest to be
7-9 charged for any student loan at a rate sufficient to pay the
7-10 interest on outstanding bonds, <plus> any expenses incident to
7-11 their issuance, sale, and retirement, and all or a portion of the
7-12 board's expenses related to the operation of the student loan
7-13 program. Interest shall be postponed by the board as long as a
7-14 student is enrolled at a participating institution and may be
7-15 postponed at the board's discretion as long as a student is
7-16 enrolled at any other higher educational institution, provided that
7-17 the total interest paid is to be equal to that fixed at the time
7-18 the note evidencing the loan is executed.
7-19 SECTION 11. Subsection (d), Section 52.52, Education Code,
7-20 is amended to read as follows:
7-21 (d) The board may approve and enter into agreements that are
7-22 necessary for the operation of the student loan program or that
7-23 relate to the issuance of bonds <On or before September 1, 1995,
7-24 the board shall terminate the contract referenced in Subsection (c)
7-25 of this section. After that date, the board may not make an
7-26 agreement with a guarantor concerning any insured student loans the
7-27 board authorizes that requires the board to file suit or take other
8-1 action to collect on a defaulted loan if the guarantor does not
8-2 impose that requirement on other lenders making the same kind of
8-3 insured student loans>.
8-4 SECTION 12. Subsection (b), Section 52.83, Education Code,
8-5 is amended to read as follows:
8-6 (b) The bonds must be dated and bear interest at a rate or
8-7 rates prescribed by the board in accordance with the resolution for
8-8 the issuance of the bonds, except that the rate may not exceed the
8-9 maximum net effective rate allowed by law. The resolution may
8-10 provide for:
8-11 (1) any type of rate, including a fixed, variable,
8-12 floating, or adjustable rate; and
8-13 (2) any arrangement for the periodic determination of
8-14 interest rates, including a formula, index, or contract.
8-15 SECTION 13. Subsections (b) and (c), Section 52.89,
8-16 Education Code, are amended to read as follows:
8-17 (b) The fund consists of proceeds from the sale of the bonds
8-18 deposited in accordance with this section, <and> gifts or grants
8-19 made to the board for purposes of the fund, and deposits made as
8-20 authorized by this chapter.
8-21 (c) The board shall deposit the proceeds from the sale of
8-22 bonds in the fund, excluding any accrued interest on the bonds
8-23 which shall be deposited in the board interest and sinking fund
8-24 relating to the bonds.
8-25 SECTION 14. Not later than December 31, 1994, the Texas
8-26 Higher Education Coordinating Board shall prepare and submit to the
8-27 Legislative Budget Board, the State Auditor, the Senate Finance
9-1 Committee, and the House Appropriations Committee a cost and
9-2 efficiency management study of the administration and the
9-3 administrative costs of the student loan program authorized by
9-4 Chapter 52, Education Code.
9-5 SECTION 15. The importance of this legislation and the
9-6 crowded condition of the calendars in both houses create an
9-7 emergency and an imperative public necessity that the
9-8 constitutional rule requiring bills to be read on three several
9-9 days in each house be suspended, and this rule is hereby suspended,
9-10 and that this Act take effect and be in force from and after its
9-11 passage, and it is so enacted.