BILL ANALYSIS


                                                    C.S.H.B. 1697
                                           By: Maxey (Barrientos)
                                                        Education
                                                          5-18-95
                            Senate 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 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.

PURPOSE

As proposed, C.S.H.B. 1697 provides information on the default,
graduation and placement rates of students attending a proprietary
school. 

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is granted
to the Central Education Agency under SECTION 1.

SECTION BY SECTION ANALYSIS

SECTION 1. (a)  Defines "guaranteed student loan" and "proprietary
school."

     (b)  Requires the Central Education Agency (agency) to collect
     and maintain information relating to guaranteed student loans
     for each proprietary school in this state that is eligible to
     enroll a student receiving a guaranteed student loan. 
     Requires the information collected by the agency to include
     certain information.
     
     (c)  Requires the agency to prepare for distribution to a
     student applying for a guaranteed student loan to attend an
     institution to which this section applies materials which are
     designed to inform the student of the graduation, placement,
     and loan rates for the institution collected under Subsection
     (b).  Authorizes the agency to provide the information in any
     form the board considers reasonable and to provide rates for
     the institution as a whole for particular programs of the
     institution.
     
     (d)  Requires the agency, by rule, to require postsecondary
     educational institutions covered by this section and entities
     administering guaranteed student loans in this state to report
     information that the board requires for the administration of
     this section; and require each entity that administers
     guaranteed student loans in this state to provide each
     applicant for a guaranteed student loan to attend an
     institution to which this section applies with the materials
     prepared by the board under Subsection (c).
     
     (e)  Requires the agency to include in the materials
     distributed under Subsection (c) information warning the
     student of the possible consequences of defaulting on
     repayment of the student loan.  Requires the agency to
     prescribe the form and content of the warning.  Requires the
     warning to include information relating to certain items, with
     any additions or changes prescribed by the board to ensure
     that the information is clear and accurate.
     
     (f)  Requires the agency to prepare materials for distribution
     to students applying for guaranteed student loans as required
     by this section by September 1, 1996.
SECTION 2. Effective date:  September 1, 1995.

     SECTION 3.     Emergency clause.