By: Callegari H.B. No. 3587

A BILL TO BE ENTITLED

AN ACT

relating to the functions of the Texas Guaranteed Student Loan Corporation.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Sections 57.01 and 57.11, Education Code, are amended to read as follows:

Sec. 57.01. DECLARATION OF POLICY. The legislature, giving due consideration to the historical and continuing interest of the people of the State of Texas in encouraging deserving and qualified persons to realize their aspirations for education beyond high school, finds and declares that postsecondary education for qualified persons [those] who desire to pursue such [an] education [and are properly qualified therefor] is important to the welfare and security of this state and the nation and, consequently, is an important public purpose. The legislature finds and declares that the state can achieve its full economic and social potential only if every individual has the opportunity to contribute to the full extent of the individual's [his or her] capabilities and only when financial barriers to the individual's [his or her] economic, social, and educational goals are removed. It is, therefore, the purpose of this chapter to establish the Texas Guaranteed Student Loan Corporation to promote and improve the postsecondary educational access and success of students in this state and the nation by:

(1) administering [administer] a guaranteed student loan program or any other student loan program the corporation is authorized, qualified, or required by federal or other law to administer in order to assist qualified [Texas] students in Texas and across the nation in receiving a postsecondary education in this state or elsewhere in the nation; and

(2) providing students and families, student loan borrowers, educational institutions, and other entities both in this state and nationally, on a fee-for-service basis when the corporation determines appropriate, with [provide] necessary and desirable information, products, tools, functions, and services related to public and private student loan and student financial aid programs [the loan program], including:

(A) support services relating to financial literacy, student loan debt repayment considerations, student loan default prevention, policy training, the effective and efficient delivery of higher education student financial aid, and college promotion outreach; and

(B) 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 student loan programs, and other relevant topics [including the prevention of student loan default].

Sec. 57.11. TEXAS GUARANTEED STUDENT LOAN CORPORATION. (a) The Texas Guaranteed Student Loan Corporation is created to:

(1) administer any student loan program the corporation is required, qualified, or authorized by federal or other law to administer and to provide any related information, products, tools, functions, and services in accordance with applicable law, including the Federal Family Education Loan Program and the Federal Direct Student Loan Program; and

(2) administer any other program or function [the programs] authorized by this chapter and provide related services.

(b) The corporation is a public nonprofit corporation and, except as otherwise provided in this chapter, has all the powers and duties incident to a nonprofit corporation under Chapter 22, Business Organizations Code [the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes)].

(c) [(b)] Except as otherwise provided by law, all expenses of the corporation shall be paid from revenue [income] of the corporation.

(d) [(c)] The corporation is subject to Chapters [Chapter] 551 and 552, Government Code.

(e) [(d)] Student loan borrower information collected, assembled, or maintained by the corporation is confidential and is not subject to disclosure under Chapter 552, Government Code.

SECTION 2. Section 57.1311(b), Education Code, is amended to read as follows:

(b) The training program must provide the person with information regarding:

(1) the provisions of this chapter and the corporation's programs, functions, rules, and budget;

(2) the results of the most recent formal audit of the corporation;

(3) the requirements of laws that primarily relate to or affect the business of the corporation [relating to open meetings, public information, and conflicts of interest]; and

(4) any applicable ethics policies adopted by the corporation [or the Texas Ethics Commission].

SECTION 3. Section 57.18, Education Code, is amended by adding Subsection (c) to read as follows:

(c) The board is not subject to Section 551.125, Government Code. Notwithstanding any other provision of Chapter 551, Government Code, any of the corporation's directors may attend any board meeting by telephone conference call, provided that the telephone conference is audible to the public at the meeting location specified in the meeting's notice during each part of the meeting that is required to be open to the public.

SECTION 4. Section 57.19(d), Education Code, is amended to read as follows:

(d) The president or the president's designee shall develop a [an intra-agency] career ladder program for the corporation. The program shall require internal corporate [intra-agency] postings of all nonentry level positions concurrently with any public posting.

SECTION 5. Section 57.20(a), Education Code, is amended to read as follows:

(a) The corporation shall appoint an ombudsman [maintain a system] to promptly and efficiently act on complaints filed with the corporation. The ombudsman [corporation] shall maintain information about parties to the complaint, the subject matter of the complaint, a summary of the results of the review or investigation of the complaint, and its disposition.

SECTION 6. Sections 57.21(a) and (c), Education Code, are amended to read as follows:

(a) The corporation shall take an active role in coordinating, facilitating, promoting, and providing assistance and support to:

(1) programs that focus on and disseminate [designed to make available to the residents of this state] information regarding [concerning] postsecondary education awareness and the availability of student financial aid[, including the Federal Family Education Loan Program,] and that [to] assist families in obtaining [needed] postsecondary education financing;

(2) programs designed to assist students, families, borrowers, and schools in preventing [prevent] student loan default throughout the life of the loan, provided that such programs are funded by statutory or regulatory mandate, compensation, grant, contract, award, or other appropriate means; and

(3) programs designed to increase student retention and graduation rates in postsecondary education.

(c) To the extent practicable, each [Each] state agency that conducts higher education and financial aid outreach activities shall enter into a memorandum of understanding with the corporation. The memorandum of understanding may [must] outline how the corporation and the state agency will coordinate outreach activities to maximize resources and avoid duplication.

SECTION 7. The heading to Section 57.22, Education Code, is amended to read as follows:

Sec. 57.22. APPLICATION OF BUSINESS ORGANIZATIONS CODE [THE TEXAS NON-PROFIT CORPORATION ACT].

SECTION 8. Section 57.22(a), Education Code, is amended to read as follows:

(a) The corporation is subject to Chapter 22, Business Organizations Code [the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes)], except that:

(1) the corporation may not make donations for the public welfare or for charitable or scientific purposes or in aid of war activities;

(2) the corporation is not required to file articles of incorporation;

(3) the corporation is not subject to voluntary or involuntary dissolution;

(4) the corporation may not be placed in receivership; and

(5) the corporation is not required to make reports to the secretary of state under Section 22.357, Business Organizations Code [Article 9.01 of that Act].

SECTION 9. Section 57.24, Education Code, is amended to read as follows:

Sec. 57.24. AUTHORITY TO PARTICIPATE IN OTHER REVENUE-GENERATING ACTIVITIES; LIMITATIONS. (a) The corporation may participate in a revenue-generating activity that is reasonably aligned [consistent] with or that may further the corporation's purposes or business if the board determines that the revenue from the activity may:

(1) [is sufficient to] cover the costs of the activity; and

(2) provide funds to support activities approved by the board as the corporation's philanthropic activities or as having strategic or positioning importance to the corporation [may contribute to a reduction in the insurance premium paid by students under Section 57.43 of this code].

(b) If[, under Subsection (a) of this section,] the board authorizes the corporation to perform additional services under Subsection (a), the corporation may not require postsecondary educational institutions or students to use those services unless required by state or federal law.

SECTION 10. Section 57.41(a), Education Code, is amended to read as follows:

(a) The corporation shall serve as the designated guarantee agency under the Federal Family Education Loan Program in accordance with [loans made to eligible borrowers by eligible lenders as provided by the federal guaranteed student loan program under] the Higher Education Act of 1965, 20 U.S.C. Section [Sec.] 1001 et seq., as amended, regulations adopted under that act, and other applicable federal law.

SECTION 11. Section 57.461, Education Code, is amended to read as follows:

Sec. 57.461. [POSTSECONDARY EDUCATIONAL INSTITUTIONS AND LENDER] ADVISORY COMMITTEES. [(a)] The corporation shall establish advisory committees as the board considers appropriate [:

[(1) an advisory committee that is composed of 15 members who represent the postsecondary educational institutions that participate in the corporation's guaranteed student loan program; and

[(2) an advisory committee that is composed of 12 members including:

[(A) one member who represents the Texas Higher Education Coordinating Board; and

[(B) 11 members who represent lenders that participate in the corporation's guaranteed student loan program].

[(b) The board shall appoint advisory committee members on the recommendation of the president.

[(c) The board may establish other advisory committees as the board considers necessary.

[(d) The board shall:

[(1) specify each advisory committee's purpose and duties; and

[(2) require each committee to report to the board in a manner specified by the board relating to each committee's activities and work results.]

SECTION 12. Sections 57.47(a), (b), and (d), Education Code, are amended to read as follows:

(a) If a student borrower defaults on a loan and the corporation is required to honor the guarantee, the corporation may [or the Texas Higher Education Coordinating Board shall] bring suit against the defaulting party in accordance with the requirements of the Higher Education Act of 1965, 20 U.S.C. Section [Sec.] 1001 et seq., as amended.

(b) A suit against a defaulting party under this section may be brought in the county in which the defaulting person resides, in which the lender is located, or in Travis or Williamson County.

(d) Notwithstanding any other law, if the corporation [or the Texas Higher Education Coordinating Board] brings suit against a defaulting party under this section, the corporation [or the coordinating board, as appropriate,] shall pay 50 percent of the filing fee or other costs of court taxed and collected in advance that are in effect on the date on which the suit is filed. If the defaulting borrower prevails in the suit filed under this section, the corporation [or the coordinating board, as appropriate,] shall pay the remaining 50 percent of the statutory filing fee on the date of the final disposition of the suit. If the corporation [or coordinating board] prevails in the suit:

(1) the judgment shall find the defaulting borrower liable to the corporation [or the coordinating board, as appropriate,] for the amount of the filing fee; and

(2) the corporation [or coordinating board, as appropriate,] shall pay the remaining 50 percent of the statutory filing fee not later than one week after the date on which the defaulting borrower pays to the corporation [or coordinating board, as appropriate,] the full amount, including the filing fee, for which the borrower is liable to the corporation [or coordinating board].

SECTION 13. Section 57.48(a), Education Code, is amended to read as follows:

(a) Except as provided by Subsection (g), the corporation shall report to the comptroller the name of any person who is in default on a loan guaranteed or administered under this chapter. The report must contain the information and be submitted in the manner and with the frequency required by rules of the comptroller.

SECTION 14. Sections 57.481(a), (b), and (c), Education Code, are amended to read as follows:

(a) [In this section, "loan default rate" means the rate at which student borrowers default on loans guaranteed by the corporation as determined by the corporation in compliance with federal guidelines.

[(b)] The corporation shall take a comprehensive and [an] active role in coordinating, facilitating, and providing technical assistance on guaranteed student loan default prevention and reduction initiatives and programs that promote responsible borrowing, financial literacy, debt management, research, and informed policymaking [in the state] and shall work with the appropriate state agencies and other entities inside and outside this state, including eligible postsecondary educational institutions, eligible lenders, servicers, secondary markets, the Texas Higher Education Coordinating Board, the Texas [Central] Education Agency, [and] state professional and occupational licensing agencies, and the United States Department of Education.

(b) [(c)] The corporation shall maintain a system of communication among the appropriate state agencies and entities to address student [reduce] loan default prevention issues [claims].

SECTION 15. Section 57.49, Education Code, is amended to read as follows:

Sec. 57.49. COOPERATION OF STATE AGENCIES AND SUBDIVISIONS. Each agency and political subdivision of the state shall cooperate with the corporation in providing information to the agency's or political subdivision's clients concerning student financial aid, including information about delinquency, default prevention, and life-of-loan issues. Each agency and political subdivision shall provide information to the corporation on request to assist the corporation in curing delinquent loans, [and] collecting defaulted loans, and developing information and reports concerning responsible borrowing.

SECTION 16. Sections 57.50, 57.71, and 57.78, Education Code, are amended to read as follows:

Sec. 57.50. NONDISCRIMINATION. Neither the corporation nor an eligible lender may discriminate against an eligible student in making a loan or loan guarantee on the basis of race, age, religion, or sex or any other basis prohibited by applicable law.

Sec. 57.71. RESERVE AND OPERATING FUNDS. The corporation shall establish reserve and operating funds in accordance with Sections [Section] 422, 422A, and 422B of the Higher Education Act of 1965 (20 U.S.C. Sections [Section] 1072, 1072a, and 1072b), as amended.

Sec. 57.78. INVESTMENTS. The reserve and operating funds established by the corporation under Section 57.71 shall [All money of the corporation may] be invested in accordance with Sections 422A and 422B of the Higher Education Act of 1965 (20 U.S.C. Sections 1072a and 1072b), as amended, or other applicable federal law [Chapter 2256, Government Code].

SECTION 17. The following laws are repealed:

(1) Sections 57.19(g) and (h), Education Code;

(2) Sections 57.41(b), (c), and (d), Education Code;

(3) Section 57.42, Education Code;

(4) Section 57.43, Education Code;

(5) Section 57.44, Education Code;

(6) Section 57.45, Education Code;

(7) Section 57.46, Education Code; and

(8) Sections 57.481(d), (e), (f), (g), and (h), Education Code.

SECTION 18. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2011.