HBA-KMH H.B. 2568 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2568 By: Cuellar Higher Education 3/17/1999 Introduced BACKGROUND AND PURPOSE The Texas Guaranteed Student Loan Corporation (TGSLC) was established by the 66th Texas Legislature in 1979 to administer the federal Guaranteed Student Loan Program, later renamed the Federal Family Education Loan Program (FFELP), on behalf of the U.S. Department of Education for the State of Texas. TGSLC is established as a public nonprofit corporation. As such it receives no appropriations from the Texas Legislature. However, its board of directors is appointed by the governor and confirmed by the senate. It is subject to the provisions of the Texas Sunset Act and Open Meetings Act by statute and the Open Records Act by attorney general's opinion. The state auditor also has the authority to conduct audits of TGLSC. FFELP is the largest source of student financial aid in Texas, providing $1.6 billion in 410,000 educational loans to 120,000 postsecondary education students and parents. Since 1981, TGSLC has processed approximately $12 billion in federally insured educational loans for students and parents. The annual default rate on which the TGSLC reinsurance is based is less than five percent. FFELP provides 67 percent of all state and federal student financial aid allocated each year. H.B. 2568 amends TGSLC's authorizing statute to conform with changes made in 1998 to FFELP provisions in the federal Higher Education Act of 1965 (20 U.S.C. 1001 et seq.), and requires TGSLC to work with other entities to develop, implement, and coordinate awareness and outreach actitives concerning student financial aid and postsecondary educational opportunities. This bill also revokes TGSLC's authority to make loans. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 57.01, Education Code, by amending the policy of the Texas Guaranteed Student Loan Corporation (TGSLC) to include providing necessary and desirable services related to the loan program, including cooperative awareness efforts with appropriate educational and civic associations designed to disseminate postsecondary education awareness information, including information regarding student financial aid and the Federal Family Education Loan Program, and other relevant topics including the prevention of student loan default. SECTION 2. Amends Section 57.11, Education Code, by adding Subsection (d), to require that the student loan borrower information collected, assembled, or maintained by TGSLC is confidential and is not subject to disclosure under Chapter 552 (Public Information), Government Code. SECTION 3. Amends Section 57.12(a), Education Code, to extend the existence of the TGSLC until September 1, 2005, rather than September 1, 2003. SECTION 4. Amends Subchapter B, Chapter 57, Education Code, by adding Sections 57.21 and 57.211, as follows: Sec. 57.21. PROGRAMS RELATED TO STUDENT FINANCIAL AID AND COMPLETION OF POSTSECONDARY EDUCATION. Requires the TGSLC to assist in coordinating, facilitating, promoting, and providing assistance and support to programs designed to inform Texas residents about postsecondary education and the availability of student financial aid, to prevent student loan default, and to increase student retention and graduation rates in postsecondary education. Requires TGSLC to coordinate its efforts under this section with other entities. Sec. 57.211. SUPPORT OF EDUCATIONAL PURPOSES. Authorizes TGSLC to support educational purposes with the approval of the board of directors of TGSLC (board). SECTION 5. Amends Section 57.22, Education Code, to withdraw the prohibition against TGSLC from making donations for educational purposes. Makes a conforming change. SECTION 6. Amends Sections 57.41(c) and (d), Education Code, to withdraw the express authority of TGSLC to make loans and the stipulated conditions under which TGSLC was authorized to make loans. SECTION 7. Amends Section 57.43, Education Code, to withdraw a stipulation that if TGSLC imposes an insurance premium under this section TGSLC must impose the lowest insurance premium practicable. SECTION 8. Amends Section 57.45(g), Education Code, by requiring TGSLC to pay the lender or holder under the provisions of the Higher Education Act of 1965, 20 U.S.C. 1001 et seq., as amended, rather than meet the claim out of the guarantee account established under Section 57.72 (Guarantee Account) of this code, provided, however, any such subsequent holder shall be required to comply with other provisions of this chapter. SECTION 9. Amends Section 57.461(b), Education Code, to replace the executive director with the president for making recommendations to the board on the appointment of advisory committee members. SECTION 10. Amends Section 57.49, Education Code, to withdraw the restriction under this section that an agency or political subdivision act within the extent allowed by law. Details the form of cooperation required between agencies and political subdivisions in providing information concerning student financial aid, curing delinquent loans, and collecting defaulted loans. SECTION 11. Amends Section 57.71, Education Code, as follows: Sec. 57.71. New Title: RESERVE AND OPERATING FUNDS. Requires TGSLC to establish operating funds in accordance with Section 422 of the Higher Education Act of 1965 (20 U.S.C. 1072), as amended. Makes nonsubstantive changes. SECTION 12. Amends Section 57.78, Education Code, as follows: Sec. 57.78. New Title: INVESTMENTS. Authorizes all money of TGSLC to be invested only in accordance with Chapter 2256, Government Code. Withdraws all other provisions regarding investment of TGSLC funds. Deletes "depositories" from the title. SECTION 13. Repealer: Section 57.72 (Guarantee Account), Section 57.73 (Operating Account), and Section 57.74 (Other Corporate Accounts), Education Code. SECTION 14.Emergency clause. Effective date: upon passage.