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Amend HB 3851 on third reading (committee report) by adding
the following new section and renumbering remaining sections
accordingly:
SECTION __. Subtitle A, Title 3, Education Code, is amended
by adding Chapter 57A to read as follows:
CHAPTER 57A. STANDARDS OF CONDUCT APPLICABLE TO EDUCATIONAL LOAN
PRACTICES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 57A.01. DEFINITIONS. In this chapter:
(1) "Affiliated entity" means an alumni association,
booster club, or other organization recognized by or affiliated
with a postsecondary educational institution as an official
organization of the institution.
(2) "Educational loan" means:
(A) any loan made, insured, or guaranteed under
Title IV, Higher Education Act of 1965 (Pub. L. No. 89-329); or
(B) a private loan provided by an educational
loan lender that:
(i) is not made, insured, or guaranteed
under Title IV, Higher Education Act of 1965 (Pub. L. No. 89-329);
and
(ii) is issued by the lender to a student or
the parent of a student expressly for postsecondary educational
expenses, regardless of whether the loan involves enrollment
certification by the postsecondary educational institution that
the student attends.
(3) "Educational loan lender" means a person whose
primary business is:
(A) making, brokering, arranging, or accepting
applications for educational loans; or
(B) engaging in a combination of activities
described by Paragraph (A).
(4) "Gift" means any gratuity, favor, discount,
entertainment, hospitality, or other item having a monetary value
of more than $20. The term includes:
(A) any service, transportation, lodging, or
meal; and
(B) a gift provided in kind, by purchase of a
ticket, through payment in advance, or through reimbursement after
expenses have been incurred.
(5) "Postsecondary educational expenses" means any of
the expenses that are included as part of a student's "cost of
attendance," as defined by Section 472, Higher Education Act of
1965 (Pub. L. No. 89-329).
(6) "Postsecondary educational institution" means any
educational institution, public or private, that offers a degree,
certificate, or program of study beyond that offered in secondary
school. The term includes:
(A) an institution of higher education, as
defined by Section 61.003; and
(B) a private or independent institution of
higher education, as defined by Section 61.003.
(7) "Revenue sharing" means any arrangement under
which an educational loan lender pays a postsecondary educational
institution or affiliated entity a percentage of the principal of
educational loans directed toward the lender from a borrower for
postsecondary educational expenses related to attending the
institution, other than an arrangement permitted under Title IV,
Higher Education Act of 1965 (Pub. L. No. 89-329).
Sec. 57A.02. GENERAL PROVISIONS RELATING TO GIFTS.
(a) For purposes of this chapter, a gift to the family member of an
employee of a postsecondary educational institution who is related
to the employee within the second degree by consanguinity or
affinity, as determined under Subchapter B, Chapter 573, Government
Code, is considered to be a gift to the employee if the employee
knowingly acquiesces in the giving of the gift and the employee has
reason to believe the gift is being given because of the employee's
official position as an employee.
(b) A provision of this chapter prohibiting an action
regarding a gift to an employee of a postsecondary educational
institution does not apply to a gift that consists of:
(1) standard informational material related to a loan
such as a brochure;
(2) food, refreshments, training, or informal
material furnished to the employee as an integral part of a training
session or through the employee's participation in an advisory
council that is designed to improve the educational loan lender's
services to the institution, if that training or participation
contributes to the professional development of the employee; or
(3) favorable terms, conditions, or borrower benefits
on an educational loan provided to the employee as a student of a
postsecondary educational institution.
Sec. 57A.03. EXCEPTION FROM APPLICABILITY OF CHAPTER.
(a) In this chapter, the term "educational loan lender" does not
include:
(1) the Texas Guaranteed Student Loan Corporation; or
(2) the coordinating board.
(b) This chapter does not apply to the relationship between
the Texas Guaranteed Student Loan Corporation or the coordinating
board and:
(1) a postsecondary educational institution; or
(2) an employee of a postsecondary educational
institution.
Sec. 57A.04. CONFLICT WITH FEDERAL LAW. This chapter does
not prohibit or affect any action authorized under Title IV, Higher
Education Act of 1965 (Pub. L. No. 89-329), or other federal law.
If a provision of this chapter and a provision of federal law,
including a regulation, or an interpretation of federal law by an
agency authorized to interpret or administer that federal law, are
inconsistent or in conflict, federal law or interpretation controls
and the inconsistent or conflicting provision of this chapter does
not apply.
[Sections 57A.05-57A.20 reserved for expansion]
SUBCHAPTER B. STANDARDS OF CONDUCT APPLICABLE TO EDUCATIONAL LOAN
LENDERS, POSTSECONDARY EDUCATIONAL INSTITUTIONS, AFFILIATED
ENTITIES, AND CERTAIN EMPLOYEES
Sec. 57A.21. PROHIBITION AGAINST REVENUE SHARING. (a) An
educational loan lender and a postsecondary educational
institution or affiliated entity may not engage in revenue sharing.
(b) An arrangement permitted under Title IV, Higher
Education Act of 1965 (Pub. L. No. 89-329), that would constitute
revenue sharing if not permitted under that title may not provide
consideration to a postsecondary educational institution or
affiliated entity in exchange for a benefit provided to the
educational loan lender by the institution or entity unless that
benefit is authorized by that title.
Sec. 57A.22. PROHIBITION AGAINST CERTAIN ACTIVITIES BY
EDUCATIONAL LOAN LENDERS. An educational loan lender may not:
(1) offer or provide a gift to a postsecondary
educational institution, an affiliated entity, or an employee of a
postsecondary educational institution or affiliated entity who is
employed in a capacity in which the employee oversees financial aid
matters at the institution or entity or advises students or
potential students of the institution on financial aid matters,
except that the lender may offer or provide a scholarship or other
charitable donation to the institution, entity, or employee if the
scholarship or donation is not made in exchange for the
institution, entity, or employee:
(A) recommending the lender to students or
potential students of the institution who are seeking an
educational loan or other financial aid; or
(B) providing any other special treatment or
consideration to the lender;
(2) provide any remuneration to an employee of a
postsecondary educational institution or affiliated entity for
service on an advisory board to the lender, except that the lender
may reimburse the employee for reasonable and necessary expenses
incurred by the employee in serving on an advisory board in
accordance with any applicable ethics policies adopted by the Texas
Ethics Commission; or
(3) allow an employee, representative, or agent of the
lender to represent to any borrower or prospective borrower that
the employee, representative, or agent is an employee,
representative, or agent of a postsecondary educational
institution.
Sec. 57A.23. PROHIBITION AGAINST SOLICITATION OR
ACCEPTANCE OF CERTAIN GIFTS. (a) A postsecondary educational
institution, an affiliated entity, or an employee of a
postsecondary educational institution or affiliated entity who is
employed in a capacity in which the employee oversees financial aid
matters at the institution or entity or advises students or
potential students of the institution on financial aid matters may
not solicit or accept any gift from an educational loan lender in
exchange for the institution, entity, or employee recommending the
lender to students or potential students of the institution who are
seeking an educational loan or other financial aid.
(b) This section does not prohibit a postsecondary
educational institution, an affiliated entity, or an employee of a
postsecondary educational institution or affiliated entity from
soliciting or accepting a scholarship or other charitable donation
from an educational loan lender that is not made in exchange for the
institution, entity, or employee:
(1) recommending the lender to students or potential
students of the institution who are seeking an educational loan or
other financial aid; or
(2) providing any other special treatment or
consideration to the lender.
Sec. 57A.24. PROHIBITION AGAINST MISLEADING IDENTIFICATION
OF LENDER EMPLOYEES AND REPRESENTATIVES. An employee,
representative, or agent of an educational loan lender may not
represent to any person that the employee, representative, or agent
is a member of the staff of a financial aid office of a
postsecondary educational institution.
Sec. 57A.25. DISCLOSURE OF EDUCATIONAL LOAN INFORMATION ON
REQUEST OF INSTITUTION. (a) Except as provided by Subsection (c),
on the request of a postsecondary educational institution, an
educational loan lender shall disclose to the institution, to the
extent reasonably ascertainable:
(1) the historic default rates of the lender's
educational loans made to borrowers who attend or attended the
institution;
(2) the rates of interest charged to borrowers from
the institution in the year preceding the year of the disclosure;
(3) the number of borrowers obtaining each rate of
interest described by Subdivision (2); and
(4) the methods by which the lender processes
educational loan applications.
(b) On request of a student or other person, a postsecondary
educational institution shall disclose to the person information
obtained by the institution under Subsection (a).
(c) This section does not apply to an educational loan
funded, insured, or guaranteed by the federal government.
Sec. 57A.26. DISCLOSURE OF OWNERSHIP INTEREST IN
EDUCATIONAL LOAN LENDER BY CERTAIN INSTITUTION EMPLOYEES. (a) In
this section, "dependent child" means a child, including an adopted
child or stepchild, who is an individual's dependent child for
purposes of Section 572.006, Government Code.
(b) Each employee of a financial aid office of a
postsecondary educational institution shall file with the
institution in the manner prescribed by the institution a
disclosure statement indicating whether the employee or the
employee's spouse or dependent child owns any shares of stock or
holds another ownership interest in an educational loan lender.
(c) The disclosure statement must be filed on the date the
employee begins employment with the financial aid office and must
be supplemented not later than the fifth business day after the date
on which the employee or the employee's spouse or dependent child
later acquires any stock or other ownership interest in an
educational loan lender.
(c-1) An employee who is employed in a financial aid office
of a postsecondary educational institution on January 1, 2008,
shall file a disclosure statement as required by this section not
later than February 1, 2008. This subsection expires September 1,
2008.
(d) The disclosure statement must indicate the name of the
educational loan lender in which the employee, spouse, or dependent
child, as applicable, owns any stock or holds any other ownership
interest and the number of shares of stock held or the amount,
percentage, value, or other reasonable description of the other
ownership interest, as applicable.
(e) The head of a financial aid office of the postsecondary
educational institution must review and sign each disclosure
statement filed by an employee of the office, except that any
statement filed by the head of the financial aid office must be
reviewed and signed by the president of the institution. The
disclosure statements must be maintained in the financial aid
office.
(f) This section does not require the disclosure of any
ownership of shares in a publicly traded mutual fund or similar
investment vehicle in which the person does not exercise any
discretion regarding the investment of the assets of the fund or
other investment vehicle.
(g) An employee who knowingly fails to file a disclosure
statement as required by this section is subject to disciplinary
action, including termination.
[Sections 57A.27-57A.40 reserved for expansion]
SUBCHAPTER C. REQUIREMENTS RELATING TO LENDER LISTS
Sec. 57A.41. REQUIREMENTS RELATING TO LENDER LISTS. (a) A
postsecondary educational institution may make available a list of
one or more recommended or suggested educational loan lenders for
use in any form by borrowers or prospective borrowers who attend or
have indicated an intent to attend the institution or members of the
public, but the institution may not use the term "preferred" in the
name of the list or in reference to the list. If a postsecondary
educational institution makes available to borrowers or
prospective borrowers a lender list described by this subsection,
the institution must ensure that the list:
(1) discloses the process by which the institution has
selected educational loan lenders for inclusion on the list,
including the methods and criteria used to choose the lenders and
the relative importance of the criteria;
(2) states, in the same font size and same manner as
the predominant text on the document, that a borrower has the right
and ability to select the educational loan lender of the borrower's
choice, is not required to use any of the lenders on the list, and
will not be penalized for selecting a lender that is not on the
list, although the time required to obtain a loan may vary depending
on the lender selected; and
(3) is periodically reviewed and updated.
(b) An educational loan lender against whom a penalty has
been assessed under this chapter may be placed or remain on a
postsecondary educational institution's lender list only if notice
of the penalty is provided to all borrowers and prospective
borrowers who attend or have indicated an intent to attend the
institution.
[Sections 57A.42-57A.60 reserved for expansion]
SUBCHAPTER D. ENFORCEMENT; PENALTIES
Sec. 57A.61. CIVIL PENALTY. (a) An educational loan
lender, postsecondary educational institution, or affiliated
entity that violates a provision of this chapter is liable for a
civil penalty not to exceed $25,000 for each violation.
(b) The attorney general may bring suit to recover a civil
penalty under this section. In determining the amount of a penalty
to be recovered, the attorney general shall consider the nature and
severity of the violation.
Sec. 57A.62. CRIMINAL OFFENSES. (a) An employee of a
postsecondary educational institution or affiliated entity who
intentionally or knowingly violates Section 57A.23 prohibiting an
action regarding a gift commits a criminal offense.
(b) An offense under Subsection (a) is:
(1) a Class B misdemeanor if the value of the gift is
$20 or more but less than $500;
(2) a Class A misdemeanor if the value of the gift is
$500 or more but less than $1,500;
(3) a state jail felony if the value of the gift is
$1,500 or more but less than $20,000;
(4) a felony of the third degree if the value of the
gift is $20,000 or more but less than $100,000;
(5) a felony of the second degree if the value of the
gift is $100,000 or more but less than $200,000; or
(6) a felony of the first degree if the value of the
gift is $200,000 or more.
(c) A person who intentionally or knowingly violates
Section 57A.24 commits a criminal offense. An offense under this
subsection is a Class B misdemeanor.
(d) If conduct that constitutes an offense under this
section also constitutes an offense under other law, the actor may
be prosecuted under this section or the other law.
ZAFFIRINI
SHAPLEIGH
WEST