82R4920 KSD-F
By: Patrick, Hinojosa S.B. No. 1823
A BILL TO BE ENTITLED
AN ACT
relating to guaranteed student loans and alternative education
loans.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Section 53B.47, Education Code,
is amended to read as follows:
Sec. 53B.47. GUARANTEED STUDENT LOANS AND ALTERNATIVE
[ALTERNATE] EDUCATION LOANS; BONDS FOR THE PURCHASE OF EDUCATION
LOAN NOTES.
SECTION 2. Sections 53B.47(a), (b), (c), (d), (f), and (h),
Education Code, are amended to read as follows:
(a) An authority may, upon approval of the city or cities
which created the same, issue revenue bonds or otherwise borrow
money to obtain funds to purchase or to make guaranteed student
loans or alternative education loans. Revenue bonds issued for
such purpose shall be issued in accordance with and with the effect
provided in this chapter. Such bonds shall be payable from and
secured by a pledge of revenues derived from or by reason of the
ownership of guaranteed student loans or alternative education
loans and investment income after deduction of such expenses of
operating the loan program as may be specified by the bond
resolution or trust indenture.
(b) An authority may cause money to be expended to make or
purchase for its account guaranteed student loans that are
guaranteed by the Texas Guaranteed Student Loan Corporation, other
guaranteed student loans, or alternative education loans that are
executed by or on behalf of students who:
(1) are residents of this state; or
(2) have been admitted to attend an accredited
institution within this state.
(c) The authority shall contract with a nonprofit
corporation, organized under the laws of this state, whereby such
corporation will provide the reports and other information required
for continued participation in the federally guaranteed loan
program provided by the Higher Education Act of 1965, as amended, or
in an alternative education loan program.
(d) The authority, as a municipal corporation of the state,
is charged with a portion of the responsibility of the state to
provide educational opportunities in keeping with all applicable
state and federal laws. Nothing in this section shall be construed
as a prohibition against establishing policies to limit the
purchase of guaranteed student loans or alternative education loans
[to guaranteed student loans] executed by students attending school
in a certain geographical area or by students who are residents of
the area.
(f) A nonprofit corporation, whether acting at the request
of a city or cities under Subsection (e) or acting as a servicer or
administrator for another corporation that purchases or makes
guaranteed student loans or alternative education loans, or that on
its own behalf issues securities or otherwise obtains funds to
purchase or make guaranteed student loans or alternative education
loans, may:
(1) exercise the powers granted by Chapter 22,
Business Organizations Code [the Texas Non-Profit Corporation Act
(Article 1396-1.01 et seq., Vernon's Texas Civil Statutes)];
(2) service loans purchased or made from its funds or
contract with another person to service the loans;
(3) grant a security interest in a trust estate
securing its securities; and
(4) make investments as authorized by Subsection (e).
(h) An alternative education loan may be made under this
section only by or on behalf of a qualified alternative education
loan lender. An alternative education loan may not be in an amount
in excess of the difference between the cost of attendance and the
amount of other student assistance to the student, other than loans
under Section 428B(a)(1), Higher Education Act of 1965 (20 U.S.C.
Section 1078-2) (relating to parent loans), for which the student
borrower may be eligible. An alternative education loan covered by
this subsection is subject to Chapter 342, Finance Code, as
applicable, except that:
(1) the maximum interest rate on the loan may not
exceed the rate permitted under Subchapter A, Chapter 303, Finance
Code; and
(2) application and origination fees may be agreed to
by the parties and assessed at the inception of the loan, provided
that if any such fees constitute additional interest under
applicable law, the effective rate of interest agreed to over the
stated term of the loan may not exceed the rate allowed by
Subchapter A, Chapter 303, Finance Code, and accrued unpaid
interest may be added to unpaid principal at the beginning of the
agreed repayment period at the borrower's option and in accordance
with the terms of the agreement for purposes of determining the
total principal amount due at the inception of the repayment
period.
SECTION 3. Sections 1372.033(a) and (d), Government Code,
are amended to read as follows:
(a) In this section:
(1) ["Additional need" means the additional need of a
qualified nonprofit corporation determined by subtracting the
floor allocation for that qualified nonprofit corporation from that
corporation's annual need.
[(2) "Annual need" means, for a qualified nonprofit
corporation, one-half of the total principal amount of Texas
eligible loans the qualified nonprofit corporation purchased in the
two most recently completed fiscal years ending June 30.
[(3) "Floor allocation" means, for a qualified
nonprofit corporation, an allocation in the amount of the lesser of
$27 million or the qualified nonprofit corporation's annual need.
[(4)] "Qualified nonprofit corporation" has the
meaning assigned by Section 53B.02(11) [53.47], Education Code.
(2) [(5) "Remaining amount to be allocated" is the
total amount to be allocated under Section 1372.022(a)(5) in a
calendar year less the sum of the floor allocations of the qualified
nonprofit corporations that have applied for a student loan bond
allocation for the calendar year.
[(6)] "Student loan bond allocation" means the total
amount of the [an] allocation for private activity bonds under
Section 1372.022(a)(5) for a program year divided by the number of
qualified nonprofit corporation applicants that comply with all
applicable application requirements for that year.
[(7) "Texas eligible loan" means a Texas loan
purchased from the originating lender by a nonprofit corporation
acting as described by Section 53.47(g), Education Code.
[(8) "Texas loan" means a guaranteed student loan, as
defined by Section 53.47, Education Code, made on behalf of a
borrower who is:
[(A) a resident of this state; or
[(B) a student attending an accredited
institution, as defined by Section 53.47, Education Code, that is
located in this state.
[(9) "Total amount to be allocated" means the total
available under Section 1372.022(a)(5) for all applicants.]
(d) Each qualified nonprofit corporation that applies for a
student loan bond allocation in compliance with all applicable
application requirements for a program year is entitled to receive
a student loan bond [a floor] allocation for that year [except as
provided by this section. If the total amount to be allocated is
less than the sum of the floor allocations for all of the
applicants, each applicant is entitled to a proportion of the total
amount to be allocated equal to the proportion its floor allocation
bears to the total of the floor allocation for all of the
applicants. A qualified nonprofit corporation whose annual need is
zero is not entitled to apply for a student loan bond allocation].
SECTION 4. Sections 1372.033(c), (e), and (f), Government
Code, are repealed.
SECTION 5. The change in law made by this Act to Section
1372.033, Government Code, applies to the allocation of the
available state ceiling under that section beginning with the 2011
program year under Chapter 1372, Government Code.
SECTION 6. 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.