BILL ANALYSIS C.S.H.B. 1697 By: Maxey 02-28-95 Committee Report (Substituted) BACKGROUND The Texas Guaranteed Student Loan Corporation (TGSLC) was established in 1979 to administer federal higher education loan programs. In Texas, TGSLC guarantees more than 85 percent of all student loans. The default rate for loans backed by the Texas Guaranteed Student Loan Corporation (TGSLC) is 23 percent for all borrowers. However, the default rate was 46 percent in January 1994 for students who attended private trade schools, also known as proprietary schools. In many cases, these students default on their loans because they cannot get a job in the field for which they were trained. Beginning in 1995, the state will have to pay a fee to the federal government based on its number of schools with default rates exceeding 20 percent. This legislation will provide Texas students with more information on the performance of postsecondary institutions. PURPOSE H.B. 1697, as substituted provides information on the default, graduation and placement rates of students attending a postsecondary educational institution that does not grant a baccalaureate or postgraduate degree and is eligible to enroll a student receiving a guaranteed student loan. RULEMAKING AUTHORITY It is the committee's opinion that this bill does expressly grant additional rulemaking authority to the Texas Higher Education Coordinating Board (Section 61.0735 (2) (d)). SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 61 C, Education Code, by adding Section 61.0735 to read as follows: Sec. 61.0735. NOTICE RELATING TO GUARANTEED STUDENT LOANS. (a) Defines: (1) guaranteed student loan and (2) postsecondary educational institution. (b) The Coordinating board shall collect and maintain information relating to guaranteed student loans for each postsecondary educational institution that does not grant a baccalaureate or a postgraduate degree and is eligible to receive students with such loans. (c) The Coordinating board shall prepare and distribute information in subsection (b). (d) The Coordinating Board shall require: (1) postsecondary educational institutions to report information required for the administration of this section; and (2) each entity that administers guaranteed student loans must provide the applicant with the materials prepared by the board. SECTION 2. Effective date: September 1, 1995. Materials shall be provided no later than September 1, 1996. SECTION 3. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE H.B. 1697 required information on default, graduation and placement rates from all postsecondary educational institutions of this state. The committee substitute limited the postsecondary institutions to only those that do not offer baccalaureate or postgraduate degrees. SUMMARY OF COMMITTEE ACTION H.B. 1697 was considered by the committee in a public hearing on March 14, 1995. The bill was left as pending business. H.B. 1697 was considered by the committee in a public hearing on March 28, 1995. The committee considered a complete substitute for the bill. The substitute was adopted without objection by a non-record vote. The bill was reported favorably as substituted, with the recommendation that it do pass and be printed, by a record vote of 7 ayes, 0 nays, 0 pnv, 2 absent.