Bill Text: TX SB1823 | 2011-2012 | 82nd Legislature | Comm Sub


Bill Title: Relating to guaranteed student loans and alternative education loans.

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2011-05-06 - Not again placed on intent calendar [SB1823 Detail]

Download: Texas-2011-SB1823-Comm_Sub.html
 
 
  By: Patrick, Hinojosa  S.B. No. 1823
         (In the Senate - Filed March 11, 2011; March 24, 2011, read
  first time and referred to Committee on Higher Education;
  April 26, 2011, reported adversely, with favorable Committee
  Substitute by the following vote:  Yeas 7, Nays 0; April 26, 2011,
  sent to printer.)
 
  COMMITTEE SUBSTITUTE FOR S.B. No. 1823 By:  Watson
 
 
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.  Subsections (a) through (d), (f), and (h),
  Section 53B.47, 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 Chapters 20 and 22,
  Business Organizations Code, and any provision of Title 1, Business
  Organizations Code, applicable to a nonprofit corporation [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.  Subsections (a) and (d), Section 1372.033,
  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.  Subsections (c), (e), and (f), Section 1372.033,
  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.
 
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