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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