By Solis H.B. No. 1938
77R4294 JSA-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to education loans made or financed by a higher education
1-3 authority or nonprofit corporation.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 53.47, Education Code, is amended to read
1-6 as follows:
1-7 Sec. 53.47. EDUCATION LOANS; BONDS FOR THE PURCHASE OF
1-8 EDUCATION LOAN NOTES. (a) In this section:
1-9 (1) "Accredited institution" means an institution that
1-10 has either been recognized by a recognized accrediting agency, as
1-11 defined by Section 61.003, or accredited by the Accrediting
1-12 Commission for Independent Colleges and Schools, the Accrediting
1-13 Commission for Career Schools and Colleges of Technology, or the
1-14 National Accrediting Commission of Cosmetology Arts and Sciences.
1-15 (2) "Cost of attendance" means all costs of a student
1-16 incurred in connection with a program of study at an accredited
1-17 institution, as determined by the institution, including tuition
1-18 and instructional fees, the cost of room and board, books,
1-19 computers, and supplies, and other related fees, charges, and
1-20 expenses.
1-21 (3) "Education loan" means a loan that is made:
1-22 (A) by an eligible lender under the Higher
1-23 Education Act of 1965 (Pub. L. No. 89-329); or
1-24 (B) to or for the benefit of a student for the
2-1 purpose of financing all or part of the student's cost of
2-2 attendance at an accredited institution.
2-3 (b) An authority may, upon approval of the city or cities
2-4 which created the same, issue revenue bonds or otherwise borrow
2-5 money to obtain funds to purchase or to make education loans that
2-6 [student or parent loan notes which] are guaranteed under the
2-7 provisions of the Higher Education Act of 1965 [(Public Law
2-8 89-329)]. Revenue bonds issued for such purpose shall be issued in
2-9 accordance with and with the effect provided in this chapter,
2-10 except Section 53.36 shall not apply, as this [said] chapter has
2-11 been modified by Chapter 1204, Government Code, and Subchapters A
2-12 and D, Chapter 1207, Government Code [3, Acts of the 61st
2-13 Legislature, Regular Session, 1969, as amended (Article 717k-2,
2-14 Vernon's Texas Civil Statutes), and by Chapter 784, Acts of the
2-15 61st Legislature, Regular Session, 1969 (Article 717k-3, Vernon's
2-16 Texas Civil Statutes)]. Such bonds shall be payable from and
2-17 secured by a pledge of revenues derived from or by reason of the
2-18 ownership of education loans [student or parent loan notes] and
2-19 investment income after deduction of such expenses of [or]
2-20 operating the loan program as may be specified by the bond
2-21 resolution or trust indenture.
2-22 (c) [(b)] An authority [that is not an eligible lender under
2-23 the Higher Education Act of 1965, acting through a bank with trust
2-24 powers,] may cause money to be expended to make or purchase for its
2-25 account education loans [student or parent loan notes] that are
2-26 guaranteed by the Texas Guaranteed Student Loan Corporation or that
2-27 are executed by or on behalf of students who (1) are residents of
3-1 this state or (2) [who] have been admitted to attend an accredited
3-2 institution within this state. [An accredited institution shall
3-3 mean an institution which has either been recognized by a
3-4 recognized accrediting agency, as defined by Section 61.003(12) of
3-5 the Texas Education Code, or accredited by the Association of
3-6 Independent Colleges and Schools, the National Association of Trade
3-7 and Technical Schools, or the National Accrediting Commission of
3-8 Cosmetology Arts and Sciences.]
3-9 (d) An education loan made under this section that is not
3-10 made under the Higher Education Act of 1965 may not be in an amount
3-11 in excess of the difference between the cost of attendance and the
3-12 amount of other student assistance to the student, other than
3-13 loans under Section 428B(a)(1), Higher Education Act of 1965 (20
3-14 U.S.C. Section 1078-2) (relating to parent loans), for which the
3-15 student borrower may be eligible. An education loan covered by
3-16 this subsection is subject to Chapter 342, Finance Code, as
3-17 applicable, except that:
3-18 (1) the maximum interest rate on the loan may not
3-19 exceed the rate permitted under Chapter 303, Finance Code; and
3-20 (2) the interest rate on the loan may be computed by
3-21 spreading all interest contracted for, charged, or received during
3-22 the stated term of the loan as provided by Section 306.004, Finance
3-23 Code.
3-24 (e) [(c)] The authority shall contract with a nonprofit
3-25 corporation, organized under the laws of this state, whereby such
3-26 corporation will provide the reports and other information required
3-27 for continued participation in the federally guaranteed loan
4-1 program provided by the Higher Education Act of 1965 [(Public Law
4-2 89-329)]. [The custody of student or parent loan notes, purchased
4-3 by the bank on behalf of the authority, shall remain under the
4-4 control of a bank with trust powers.]
4-5 (f) [(d)] The authority, as a municipal corporation of the
4-6 state, is charged with a portion of the responsibility of the state
4-7 to provide educational opportunities in keeping with all applicable
4-8 state and federal laws. Nothing in this section shall be construed
4-9 as a prohibition against establishing policies to limit the
4-10 purchase of education loans to education loans [notes to notes]
4-11 executed by students attending school in a certain geographical
4-12 area or by students who are residents of the area.
4-13 (g) [(e)] In addition to establishing an authority under the
4-14 provisions of this chapter, the governing body of a city or cities
4-15 may request a nonprofit corporation [organized] to exercise the
4-16 powers enumerated and provided in this section for and on its
4-17 behalf. To be eligible to exercise those powers on behalf of a
4-18 city or cities, a nonprofit corporation must have issued bonds
4-19 before January 1, 2001, that qualified as qualified student loan
4-20 bonds under Section 144(b), Internal Revenue Code of 1986. If the
4-21 corporation agrees to exercise such powers, the directors of such
4-22 corporation shall thereafter be appointed by and be subject to
4-23 removal by the governing body of the city or cities, and except as
4-24 provided in this section, Sections 53.14, 53.15, 53.31, 53.32,
4-25 53.38, and 53.41 through 53.43 [of the Texas Education Code shall]
4-26 apply to and govern such corporation, its procedures, and bonds.
4-27 Notwithstanding the provisions of Section 53.42, a nonprofit
5-1 corporation which has been requested to exercise the powers
5-2 enumerated and requested in this section may invest or cause a
5-3 trustee or custodian on behalf of such nonprofit corporation[,] to
5-4 invest its funds, including the proceeds of any bonds, notes, or
5-5 other obligations issued by such nonprofit corporation and any
5-6 monies which are pledged to the payment thereof, in:
5-7 (1) certificates of deposit or other time or demand
5-8 accounts of banks and savings and loan associations which are
5-9 insured by the Federal Deposit Insurance Corporation [or the
5-10 Federal Savings and Loan Insurance Corporation], provided the
5-11 amount of any certificate of deposit in excess of that covered by
5-12 such insurance must be secured by a first and prior pledge of
5-13 government obligations having a market value of not less than 100
5-14 percent of the excess unless a nationally recognized rating agency
5-15 has given the senior securities of the bank issuing the certificate
5-16 of deposit the highest or next to the highest investment rating
5-17 available;
5-18 (2) repurchase agreements;
5-19 (3) education loans [investment securities, as defined
5-20 by Chapter 726, Acts of the 67th Legislature, Regular Session, 1981
5-21 (Article 2529b-1, Vernon's Texas Civil Statutes);]
5-22 [(4) a collective investment fund that is created as
5-23 provided by Regulation 9 of the Office of the Comptroller of the
5-24 Currency and that is invested in one or more types of investment
5-25 securities or repurchase agreements;]
5-26 [(5) an investment authorized by Subchapter A, Chapter
5-27 2256, Government Code]; or
6-1 (4) [(6)] a security issued by another nonprofit
6-2 corporation acting under this section.
6-3 (h) [(f)] A nonprofit corporation, whether acting at the
6-4 request of a city or cities under Subsection (g) or acting as an
6-5 education loan servicer or administrator for another corporation
6-6 that makes education loans under this section, [(e)] or that on its
6-7 own behalf[, that] issues securities or otherwise obtains [to
6-8 obtain] funds to purchase or make education [student or parent]
6-9 loans, may:
6-10 (1) exercise the powers granted by the Texas
6-11 Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
6-12 Texas Civil Statutes);
6-13 (2) make or purchase education loans and issue
6-14 securities or notes to obtain funds for that purpose;
6-15 (3) service loans purchased or made from its funds or
6-16 contract with another person to service the loans;
6-17 (4) [(3)] grant a security interest in a trust estate
6-18 securing its securities;
6-19 [(4) purchase or make a student or parent loan that is
6-20 guaranteed or insured, in whole or part, by one or more persons
6-21 engaged in guaranteeing or insuring student or parent loans,
6-22 including any agency of the federal government;] and
6-23 (5) make investments as authorized by Subsection (g)
6-24 [(e)].
6-25 (i) [(g)] A security interest in a trust estate granted
6-26 under Subsection (h)(4) [(f)(3)] is attached and perfected at the
6-27 time the security interest is executed and delivered by the
7-1 nonprofit corporation. The security interest grants to the secured
7-2 party a first prior perfected security interest in the trust estate
7-3 for the benefit of the secured party without regard to the location
7-4 of the assets that constitute the trust estate.
7-5 (j) An authority or nonprofit corporation making education
7-6 loans under this section is exempt from the licensing requirements
7-7 of Chapter 342, Finance Code.
7-8 SECTION 2. This Act takes effect immediately if it receives
7-9 a vote of two-thirds of all the members elected to each house, as
7-10 provided by Section 39, Article III, Texas Constitution. If this
7-11 Act does not receive the vote necessary for immediate effect, this
7-12 Act takes effect September 1, 2001.