82R29001 KSD-D
 
  By: Zaffirini S.B. No. 40
 
  (Callegari)
 
  Substitute the following for S.B. No. 40:  No.
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the composition and 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 Texans [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:
               (1)  administer a guaranteed student loan program,
  student financial aid programs, and other student loan programs to
  assist qualified [Texas] students in this state and across the
  nation in receiving a postsecondary education in this state or
  elsewhere in the nation; [and]
               (2)  assist institutions of higher education by
  providing [provide] necessary and desirable services related to
  financial aid and student [the] loan programs; and
               (3)  participate in revenue-generating activities
  related to higher education student financial aid and student loan
  programs to the extent the activities support the corporation's
  primary purposes under Subdivisions (1) and (2) [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].
         Sec. 57.11.  TEXAS GUARANTEED STUDENT LOAN CORPORATION.  (a)  
  The Texas Guaranteed Student Loan Corporation is created to
  administer the programs authorized by this chapter.
         (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 57.12(a), Education Code, is amended to
  read as follows:
         (a)  The Texas Guaranteed Student Loan Corporation is
  subject to Chapter 325, Government Code (Texas Sunset Act).  Unless
  continued in existence as provided by that chapter, the corporation
  is abolished and this chapter expires September 1, 2013 [2017].
         SECTION 3.  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, including the
  policies developed under Section 57.19(i) regarding the separation
  of policymaking and management responsibilities, 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 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 4.  Sections 57.13(a) and (b), Education Code, are
  amended to read as follows:
         (a)  The corporation is governed by a board of nine [11]
  directors in accordance with this section.
         (b)  The governor, with the advice and consent of the senate,
  shall appoint the [10] members of [to] the board as follows:
               (1)  four [five] members who must have knowledge of or
  experience in finance, including management of funds or business
  operations;
               (2)  one member who must be a student enrolled at a
  postsecondary educational institution for the number of credit
  hours required by the institution to be classified as a full-time
  student of the institution; and
               (3)  four members who must be members the faculty or
  administration of a [an eligible] postsecondary educational
  institution that is an eligible institution for purposes of the
  Higher Education Act of 1965, as amended[, as defined by Section
  57.46].
         SECTION 5.  Section 57.131(d), Education Code, is amended to
  read as follows:
         (d)  A person may not be one of the members of the board
  required by Section 57.13(b) to have knowledge of or experience in
  finance if the person:
               (1)  is a member of the board of directors or an
  employee of a [an eligible] lender that:
                     (A)  participates in a [the guaranteed] student
  loan program; or
                     (B)  originates, makes, holds, services, or has a
  pecuniary interest of any kind in higher education student loans of
  any nature; or
               (2)  owns:
                     (A)  10 percent or more of the voting stock or
  shares of a business entity that engages in an activity described by
  Subdivision (1); or
                     (B)  $15,000 or more of the fair market value of a
  business entity that engages in an activity described by
  Subdivision (1).
         SECTION 6.  Section 57.14, Education Code, is amended to
  read as follows:
         Sec. 57.14.  DIRECTORS' TERMS OF OFFICE. Members of the
  board [appointed by the governor] serve for terms of six years, with
  the terms of three [or four] members[, as applicable,] expiring on
  January 31 of each odd-numbered year.
         SECTION 7.  Section 57.17, Education Code, is amended to
  read as follows:
         Sec. 57.17.  OFFICERS. The governor shall designate the
  chairman from among the board's membership. The board shall elect
  from among its members a [chairman,] vice-chairman[,] and other
  officers that the board considers necessary. The chairman and
  vice-chairman serve for a term of one year and may be redesignated
  or reelected, as applicable.
         SECTION 8.  Subchapter B, Chapter 57, Education Code, is
  amended by adding Section 57.181 to read as follows:
         Sec. 57.181.  MEETING BY TELEPHONE CONFERENCE CALL; QUORUM
  PRESENT AT ONE LOCATION REQUIRED. (a)  Notwithstanding Chapter
  551, Government Code, the board or a board committee may hold a
  meeting by telephone conference call only if a quorum of the board
  or board committee, as applicable, is physically present at one
  location of the meeting.
         (b)  A telephone conference call meeting is subject to the
  notice requirements applicable to other meetings, except that the
  meeting notice must also specify:
               (1)  the location of the meeting where a quorum of the
  board or board committee, as applicable, will be physically
  present; and
               (2)  the intent to have a quorum present at that
  location.
         (c)  The meeting location where a quorum is physically
  present must be open to the public during the open portions of a
  telephone conference call meeting. The open portions of the
  meeting must be audible to the public at the location where the
  quorum is present and be tape-recorded at that location. The tape
  recording must be made available to the public.
         (d)  The meeting location where a quorum is physically
  present must provide two-way communication during the entire
  telephone conference call meeting, and the identification of each
  party to the telephone conference call must be clearly stated
  before the party speaks.
         (e)  A member of the board who participates in a board or
  board committee meeting by telephone conference call but is not
  physically present at the meeting location where a quorum is
  physically present is not considered to be absent from the meeting
  for any purpose. The vote of a member of the board who participates
  in a board or board committee meeting by telephone conference call
  is counted for the purpose of determining the number of votes cast
  on a motion or other proposition before the board or board
  committee.
         (f)  A member of the board may participate remotely by
  telephone conference call instead of by being physically present at
  the location of a board meeting for not more than one board meeting
  per calendar year. A board member who participates remotely in any
  portion of a board meeting by telephone conference call is
  considered to have participated in the entire board meeting by
  telephone conference call. For purposes of this subsection, remote
  participation by telephone conference call in a meeting of a board
  committee does not count as remote participation by telephone
  conference call in a board meeting regardless of whether:
               (1)  a quorum of the full board attends the board
  committee meeting; or
               (2)  notice of the board committee meeting is also
  posted as notice of a board meeting.
         (g)  A person who is not a member of the board may not speak
  at the board or board committee meeting from a remote location by
  telephone conference call, except as provided by Section 551.129,
  Government Code.
         (h)  The authority provided by this section is in addition to
  the authority provided by Section 551.125, Government Code.
         SECTION 9.  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 10.  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 11.  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
  required as a part of a guaranty agency's obligation under the
  Federal Family Education Loan Program established by the Higher
  Education Act of 1965 (20 U.S.C. Section 1071 et seq.), or 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 12.  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 13.  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 14.  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 by entering into a
  contract with the United States Department of Education, with this
  state or any agency, instrumentality, or political subdivision of
  this state, with any eligible institution as defined by Section 435
  of the Higher Education Act of 1965 (20 U.S.C. Section 1085), as
  amended, that is eligible to participate in a program under Title IV
  of that Act, with any guaranty agency as defined by Section 435 of
  that Act (20 U.S.C. Section 1085), or with any entity to which the
  United States Department of Education has awarded one or more
  contracts to provide services under Title IV of that Act [that is
  consistent with the corporation's purposes] if the board determines
  that [the revenue from the activity]:
               (1)  [is sufficient to cover the costs of] the activity
  is consistent with the corporation's purposes described by Section
  57.01; [and]
               (2)  revenue from the activity is sufficient to cover
  the costs of the activity, including the opportunity costs of any
  invested capital, within a defined period of time determined by the
  board for purposes of this section; and
               (3)  revenue from the activity will enable the
  corporation to support educational purposes under Section 57.211
  [may contribute to a reduction in the insurance premium paid by
  students under Section 57.43 of this code].
         (b)  The corporation may enter into a contract with the
  United States Department of Education under Subsection (a) alone or
  in concert with any of the entities with which the corporation may
  enter into a contract under that subsection.
         (c)  If, under Subsection (a) [of this section], the board
  authorizes the corporation to perform additional services, the
  corporation may not require postsecondary educational institutions
  or students to use those services unless required by state or
  federal law.
         (d)  If, under Subsection (a), the board authorizes the
  corporation to perform debt collection, default aversion,
  financial literacy, exit counseling, or loan servicing, the
  corporation may perform those services only in relation to higher
  education student loans.
         (e)  The corporation shall submit a written report to the
  legislature and the Legislative Budget Board not later than
  December 1 of each even-numbered year regarding the corporation's
  participation in revenue-generating activities under this section.
  The report must:
               (1)  include the amounts of revenue from and expenses
  associated with the activities;
               (2)  demonstrate how that revenue is used for the
  support of educational purposes under Section 57.211; and
               (3)  certify:
                     (A)  the reasonable and necessary amount of
  operating funds under Section 57.71 required to fulfill the
  corporation's responsibilities under Section 57.41(a); and
                     (B)  the amount of excess operating funds under
  Section 57.71.
         (f)  Contracts entered into by the corporation in pursuit of
  the corporation's primary purposes described by Sections 57.01(1)
  and (2) do not constitute revenue-generating activities under this
  section and are not subject to the requirements prescribed by this
  section.
         SECTION 15.  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 16.  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 17.  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 18.  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 19.  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 20.  Sections 57.50 and 57.71, 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.  FEDERAL [RESERVE] AND OPERATING FUNDS. The
  corporation shall maintain a federal fund [establish reserve] and
  operating fund [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.
         SECTION 21.  Subchapter D, Chapter 57, Education Code, is
  amended by adding Section 57.762 to read as follows:
         Sec. 57.762.  REVIEW BY STATE AUDITOR. In addition to any
  other audit required by law, the state auditor shall periodically
  review the corporation's activities in a manner consistent with the
  state auditor's audit plan under Chapter 321, Government Code.  The
  corporation shall reimburse the state auditor for all reasonable
  costs incurred by the state auditor in conducting a review under
  this section.
         SECTION 22.  Section 57.78, Education Code, is amended to
  read as follows:
         Sec. 57.78.  INVESTMENTS. The federal fund maintained by
  the corporation under Section 57.71 shall [All money of the
  corporation may] be invested in accordance with Section 422A of the
  Higher Education Act of 1965 (20 U.S.C. Section 1072a), as amended.
  The operating fund maintained by the corporation under Section
  57.71 may be invested only in accordance with Chapter 2256,
  Government Code. Authority to invest the operating fund in
  accordance with Chapter 2256, Government Code, complies with
  Section 422B of the Higher Education Act of 1965 (20 U.S.C. Section
  1072b), as amended.
         SECTION 23.  The following provisions of the Education Code
  are repealed:
               (1)  Section 57.13(d);
               (2)  Sections 57.19(c), (g), and (h);
               (3)  Sections 57.41(c) and (d);
               (4)  Section 57.42;
               (5)  Section 57.43;
               (6)  Section 57.44;
               (7)  Section 57.45;
               (8)  Section 57.46; and
               (9)  Sections 57.481(d), (e), (f), (g), and (h).
         SECTION 24.  (a)  Notwithstanding any other law, to comply
  with the requirements of Section 57.13, Education Code, as amended
  by this Act, and Section 30a, Article XVI, Texas Constitution:
               (1)  the term of the member of the board of directors of
  the Texas Guaranteed Student Loan Corporation appointed under
  Section 57.13(b)(1), Education Code, for a term to expire January
  31, 2017, expires September 1, 2011; and
               (2)  that board position ceases to exist on September
  1, 2011.
         (b)  Subsection (a) of this section does not prohibit the
  member of the board of directors of the Texas Guaranteed Student
  Loan Corporation serving in the board position that ceases to exist
  under that subsection from being appointed as a member of the board
  under Section 57.13(b), Education Code, for any other term if the
  person is otherwise qualified to serve in that position.
         SECTION 25.  This Act takes effect September 1, 2011.