By:  Barrientos                                        S.B. No. 511
       73R5122 SOS-F
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the student loan program administered by the Texas
    1-3  Higher Education Coordinating Board.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Subchapter D, Chapter 52, Education Code, is
    1-6  amended by adding Section 52.501 to read as follows:
    1-7        Sec. 52.501.  DEFINITIONS.  In this chapter:
    1-8              (1)  "Board" means the Texas Higher Education
    1-9  Coordinating Board.
   1-10              (2)  "Board interest and sinking fund" means an
   1-11  interest and sinking fund established by the board under Section
   1-12  52.03 of this code.
   1-13              (3)  "Board student loan fund" means a student loan
   1-14  fund established by the board under Section 52.04 of this code.
   1-15              (4)  "Bond" means a general obligation bond issued by
   1-16  the board under Article III, Section 50b, 50b-1, 50b-2, or 50b-3,
   1-17  of the Texas Constitution.
   1-18              (5)  "Student loan program" means the student loan
   1-19  program administered by the board under this chapter.
   1-20        SECTION 2.  Section 52.01, Education Code, is amended to read
   1-21  as follows:
   1-22        Sec. 52.01.  ADMINISTRATION.  The Texas Higher Education
   1-23  Coordinating Board, <Texas College and University System,> or its
   1-24  successors, shall administer the student loan program authorized by
    2-1  this chapter pursuant to Article III, Sections <Section> 50b,
    2-2  50b-1, 50b-2, and 50b-3, of the Texas Constitution.  Personnel and
    2-3  other expenses required to properly administer this chapter shall
    2-4  be funded by:
    2-5              (1)  <provided in> the general appropriations acts;
    2-6              (2)  revenues received by the board from repayment of
    2-7  student loans issued under this chapter; or
    2-8              (3)  any other source of revenue received by the board
    2-9  in connection with the operation of the student loan program.
   2-10        SECTION 3.  Subchapter A, Chapter 52, Education Code, is
   2-11  amended by adding Sections 52.03 and 52.04 to read as follows:
   2-12        Sec. 52.03.  BOARD INTEREST AND SINKING FUNDS.  (a)  The
   2-13  board by resolution may establish one or more interest and sinking
   2-14  funds as accounts in the state treasury.
   2-15        (b)  A board interest and sinking fund established under this
   2-16  section consists of deposits made by the board as provided by this
   2-17  chapter.
   2-18        (c)  A board interest and sinking fund established under this
   2-19  section may be used for any purpose related to the student loan
   2-20  program.
   2-21        (d)  The board by resolution may create and provide the terms
   2-22  of administration and use of one or more accounts in a board
   2-23  interest and sinking fund established under this section.
   2-24        Sec. 52.04.  BOARD STUDENT LOAN FUNDS.  (a)  The board by
   2-25  resolution may establish one or more board student loan funds as
   2-26  accounts in the state treasury.
   2-27        (b)  A board student loan fund established under this section
    3-1  consists of deposits made by the board as provided by this chapter.
    3-2        (c)  A board student loan fund established under this section
    3-3  may be used for any purpose related to the student loan program.
    3-4        (d)  The board by resolution may create and provide the terms
    3-5  of administration and use of one or more accounts in a board
    3-6  student loan fund established under this section.
    3-7        SECTION 4.  Section 52.11, Education Code, is amended by
    3-8  adding Subsection (n) to read as follows:
    3-9        (n)  This section applies only to bonds issued under Article
   3-10  III, Section 50b, of the Texas Constitution.
   3-11        SECTION 5.  Section 52.16, Education Code, is amended to read
   3-12  as follows:
   3-13        Sec. 52.16.  PROCEEDS FROM BOND SALE.  All proceeds from the
   3-14  sale of bonds authorized by Article III, Section 50b, 50b-1, or
   3-15  50b-2 of the Texas Constitution, shall be deposited in the state
   3-16  treasury in the Texas Opportunity Plan Fund.
   3-17        SECTION 6.  Section 52.17, Education Code, is amended to read
   3-18  as follows:
   3-19        Sec. 52.17.  INTEREST AND SINKING FUNDS <FUND>.  (a)  Each
   3-20  fiscal year a sufficient portion of the funds received by the board
   3-21  as repayment of student loans granted under this chapter, <and> as
   3-22  interest on the loans, and as other available funds relating to the
   3-23  student loan program shall be deposited in the state treasury in
   3-24  the Texas college interest and sinking fund or a board interest and
   3-25  sinking fund <College Student Loan Bonds Interest and Sinking Fund,
   3-26  referred to in this chapter as the interest and sinking fund,> to
   3-27  pay the interest and principal coming due during the ensuing fiscal
    4-1  year and to establish and maintain a reserve in the interest and
    4-2  sinking fund equal to the average annual principal and interest
    4-3  requirements of all outstanding bonds issued under this chapter
    4-4  that are secured by funds in the Texas college interest and sinking
    4-5  fund or a board interest and sinking fund.
    4-6        (b)  If in any year funds are received in excess of the
    4-7  foregoing requirements, then the excess may <shall> be:
    4-8              (1)  deposited in the Texas Opportunity Plan Fund, the
    4-9  student loan auxiliary fund, or a board interest and sinking fund;
   4-10              (2)  used to pay any costs of the board related to the
   4-11  operation of the student loan program;
   4-12              (3)  used for any lawful purpose related to the student
   4-13  loan program; or
   4-14              (4)  <and may be> used for the same purposes and upon
   4-15  the same terms and conditions prescribed for the proceeds derived
   4-16  from the sale of the bonds <Texas College Student Loan Bonds>.
   4-17        (c)  In the event that funds received by the board in any
   4-18  fiscal year as repayment of student loans and as interest on the
   4-19  loans are insufficient to pay the interest coming due and the
   4-20  principal maturing on the bonds during the ensuing fiscal year, the
   4-21  state treasurer shall transfer into the Texas college interest and
   4-22  sinking fund and each board interest and sinking fund out of the
   4-23  first money coming into the treasury, which is not otherwise
   4-24  appropriated by the constitution, an additional amount sufficient
   4-25  to pay the interest coming due and the principal maturing on the
   4-26  bonds during the ensuing fiscal year.
   4-27        (d)  The resolution authorizing the issuance of the bonds may
    5-1  provide for the deposit, from bond proceeds, of not more than 24
    5-2  months' interest, and may provide for the use of bond proceeds as a
    5-3  reserve for the payment of principal of and interest on the bonds.
    5-4        (e)  Amounts paid to the board by the federal Lender's
    5-5  Special Allowance program may be deposited in the Texas college
    5-6  interest and sinking fund, a board interest and sinking fund,  or
    5-7  used for the administration of student loan and grant programs and
    5-8  the Teacher Loan Program and Future Teacher Loan Program authorized
    5-9  under House Bill 72, 68th Legislature, 2nd Called Session, 1984, or
   5-10  other programs administered by the board as specified by the
   5-11  legislature in the General Appropriations Act.
   5-12        (f)  With respect to loans granted under this chapter, the
   5-13  board shall file semiannually with the bond review board
   5-14  established under Chapter 1078, Acts of the 70th Legislature,
   5-15  Regular Session, 1987 (Article 717k-7, Vernon's Texas Civil
   5-16  Statutes), a report on the performance of the loans, <and> the
   5-17  Texas college interest and sinking fund, and each board interest
   5-18  and sinking fund.  The bond review board shall review the reports
   5-19  filed by the board under this subsection to assess the performance
   5-20  of the loans under this chapter, <and> the Texas college interest
   5-21  and sinking fund, and each board interest and sinking fund.  The
   5-22  filing dates and the contents of the reports must comply with any
   5-23  rules adopted by the bond review board.
   5-24        SECTION 7.  Section 52.19, Education Code, is amended to read
   5-25  as follows:
   5-26        Sec. 52.19.  INVESTMENT OF FUNDS.  All money in the Texas
   5-27  college <reserve portion of the> interest and sinking fund and in
    6-1  each board interest and sinking fund, including the reserve
    6-2  portion, and all money in the Texas Opportunity Plan Fund and in
    6-3  the student loan auxiliary fund in excess of the amount necessary
    6-4  for student loans, and all money in each board student loan fund
    6-5  shall be invested by the state treasurer in the investments
    6-6  prescribed by board resolution.  The board shall furnish to the
    6-7  state treasurer a copy of the resolution prescribing authorized
    6-8  investments.  The board may sell any instruments owned in the Texas
    6-9  college interest and sinking fund, a board interest and sinking
   6-10  fund, <or in> the Texas Opportunity Plan Fund, the student loan
   6-11  auxiliary fund, or a board student loan fund at the prevailing
   6-12  market price.  Income from these investments may <shall> be
   6-13  deposited in any of those funds <the interest and sinking fund>.
   6-14        SECTION 8.  Subchapter B, Chapter 52, Education Code, is
   6-15  amended by adding Section 52.20 to read as follows:
   6-16        Sec. 52.20.  STUDENT LOAN NOTES.  (a)  Promissory notes
   6-17  evidencing student loans made by the board with proceeds from bonds
   6-18  may be deposited and held in any fund as directed by the board
   6-19  resolution that authorized the issuance of the bonds.
   6-20        (b)  The board may pledge and grant a security interest in
   6-21  all or any portion of those promissory notes to any person to
   6-22  further secure the payment of principal and interest on bonds
   6-23  issued under this chapter or of obligations under any contracts
   6-24  entered into by the board relating to the issuance of a series of
   6-25  bonds.
   6-26        SECTION 9.  Section 52.36(a), Education Code, is amended to
   6-27  read as follows:
    7-1        (a)  The board shall from time to time fix the interest to be
    7-2  charged for any student loan at a rate sufficient to pay the
    7-3  interest on outstanding bonds, <plus> any expenses incident to
    7-4  their issuance, sale, and retirement, and all or a portion of the
    7-5  board's expenses related to the operation of the student loan
    7-6  program.  Interest shall be postponed by the board as long as a
    7-7  student is enrolled at a participating institution and may be
    7-8  postponed at the board's discretion as long as a student is
    7-9  enrolled at any other higher educational institution, provided that
   7-10  the total interest paid is to be equal to that fixed at the time
   7-11  the note evidencing the loan is executed.
   7-12        SECTION 10.  Section 52.52(d), Education Code, is amended to
   7-13  read as follows:
   7-14        (d)  The board may approve and enter into agreements that are
   7-15  necessary for the operation of the student loan program or that
   7-16  relate to the issuance of bonds <On or before September 1, 1995,
   7-17  the board shall terminate the contract referenced in Subsection (c)
   7-18  of this section.  After that date, the board may not make an
   7-19  agreement with a guarantor concerning any insured student loans the
   7-20  board authorizes that requires the board to file suit or take other
   7-21  action to collect on a defaulted loan if the guarantor does not
   7-22  impose that requirement on other lenders making the same kind of
   7-23  insured student loans>.
   7-24        SECTION 11.  Section 52.83(b), Education Code, is amended to
   7-25  read as follows:
   7-26        (b)  The bonds must be dated and bear interest at a rate or
   7-27  rates prescribed by the board in accordance with the resolution for
    8-1  the issuance of the bonds, except that the rate may not exceed the
    8-2  maximum net effective rate allowed by law.  The resolution may
    8-3  provide for:
    8-4              (1)  any type of rate, including a fixed, variable,
    8-5  floating, or adjustable rate; and
    8-6              (2)  any arrangement for the periodic determination of
    8-7  interest rates, including a formula, index, or contract.
    8-8        SECTION 12.  Sections 52.89(b) and (c), Education Code, are
    8-9  amended to read as follows:
   8-10        (b)  The fund consists of proceeds from the sale of the bonds
   8-11  deposited in accordance with this section, <and> gifts or grants
   8-12  made to the board for purposes of the fund, and deposits made as
   8-13  authorized by this chapter.
   8-14        (c)  The board shall deposit the proceeds from the sale of
   8-15  bonds in the fund, excluding any accrued interest on the bonds
   8-16  which shall be deposited in the board interest and sinking fund
   8-17  relating to the bonds.
   8-18        SECTION 13.  The importance of this legislation and the
   8-19  crowded condition of the calendars in both houses create an
   8-20  emergency and an imperative public necessity that the
   8-21  constitutional rule requiring bills to be read on three several
   8-22  days in each house be suspended, and this rule is hereby suspended,
   8-23  and that this Act take effect and be in force from and after its
   8-24  passage, and it is so enacted.