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.