83R10451 KSD-F

By: Zaffirini S.B. No. 653

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) engage in:

(A) revenue-generating activities related to higher education student financial aid and student loan programs to the extent the activities are not in conflict with the corporation's primary purposes under Subdivisions (1) and (2), including providing:

(i) necessary and desirable information, products, tools, functions, and services related to public and private student loan and student financial aid programs;

(ii) support services relating to financial literacy, student loan debt repayment, and student loan default prevention;

(iii) policy training; and

(iv) the effective and efficient delivery of higher education student financial aid;

(B) college promotion, outreach, and awareness efforts described by Section 57.21(a)(1)(A)(iii); and

(C) coordinating, facilitating, promoting, and providing expertise-based assistance and support designed to assist students, families, borrowers, and schools in preventing higher education loan default throughout the life of the loan, subject to the limitations of Section 57.21 [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, 2023 [2021].

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. 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. (a) The board or a board committee may hold an open or closed meeting by telephone conference call if:

(1) the board or board committee, as applicable, determines that:

(A) an emergency or public necessity exists; or

(B) it is difficult or impossible to convene a quorum at one location; and

(2) at least one member of the board or board committee, as applicable, is physically present at the location of the meeting.

(b) A telephone conference call meeting is subject to the notice requirements applicable to other meetings under Chapter 551, Government Code. The meeting notice must also specify the location of the meeting where at least one member of the board or board committee, as applicable, will be physically present.

(c) The meeting location where at least one board or board committee member 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 that location and be recorded at that location. The recording must be made available to the public pursuant to a written request under Chapter 552, Government Code.

(d) The meeting location where at least one board or board committee member 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 each time the party speaks.

(e) A member of the board or board committee who participates in a board or board committee meeting, as applicable, by telephone conference call but is not physically present at the meeting location where at least one board or board committee member is physically present is not considered to be absent from the meeting for any purpose. The vote of a member of the board or board committee 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, as applicable.

(f) A person who is not a member of the board or board committee 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.

(g) The authority provided by this section is in addition to the authority provided by Section 551.125, Government Code.

SECTION 5. 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 6. 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 7. 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:

(A) 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 information regarding:

(i) financial literacy, student loan debt repayment considerations, and student loan default prevention;

(ii) the effective and efficient delivery of higher education financial aid;

(iii) college promotion, outreach, and awareness efforts with appropriate education and civic associations that disseminate postsecondary education awareness information, including information regarding student financial aid, the Federal Family Education Loan Program established by the Higher Education Act of 1965 (20 U.S.C. Section 1071 et seq.), and other student loan programs; and

(iv) other relevant topics; [the Federal Family Education Loan Program,] and

(B) [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 8. 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 9. 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 10. 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 engage [participate] in a revenue-generating activity [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 may cover the costs of the activity; and

(3) revenue from the activity may 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 provide [perform] additional services, the corporation may not require postsecondary educational institutions or students to use those services unless required by state or federal law.

(c) The corporation's activities under Section 57.01(1) do not constitute revenue-generating activities for purposes of this section.

SECTION 11. 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 12. 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 13. 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 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 and 57.71, Education Code, are amended to read as follows:

Sec. 57.50. NONDISCRIMINATION. The [Neither the] corporation [nor an eligible lender] may not 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 an 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 17. The following provisions of the Education Code are repealed:

(1) Sections 57.19(g) and (h);

(2) Sections 57.41(c) and (d);

(3) Section 57.42;

(4) Section 57.43;

(5) Section 57.44;

(6) Section 57.45;

(7) Section 57.46;

(8) Sections 57.481(d), (e), (f), (g), and (h); and

(9) Section 57.78.

SECTION 18. This Act takes effect September 1, 2013.