Law:Title 3. Higher Education. Subtitle A. Higher Education In General from Chapter 57. Guaranteed Student Loans (Texas)

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Subtitle A. Higher Education In General

Contents

Chapter 57. Guaranteed Student Loans

Subchapter A. General Provisions

Section  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 those who desire 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 his or her capabilities and only when financial barriers to 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 to assist qualified Texas students in receiving a postsecondary education in this state or elsewhere in the nation; and

(2)  provide necessary and desirable services related to the loan 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.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1991, 72nd Leg., ch. 450, Sec. 1, eff. Aug. 26, 1991; Acts 1999, 76th Leg., ch. 967, Sec. 1, eff. June 18, 1999.



Section  57.02.  Definitions.

In this chapter:

(1)  "Board" means the board of directors of the corporation.

(2)  "Corporation" means the Texas Guaranteed Student Loan Corporation.

(3)  "Postsecondary educational institution" means any institution, public or private, that provides courses of instruction beyond that offered in secondary schools.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979.



Subchapter B. Administration

Section  57.11.  Texas Guaranteed Student Loan Corporation.

(a) The Texas Guaranteed Student Loan Corporation is created to administer the programs authorized by this chapter. 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 the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes).

(b)  Except as otherwise provided by law, all expenses of the corporation shall be paid from income of the corporation.

(c)  The corporation is subject to Chapter 551, Government Code.

(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.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1989, 71st Leg., ch. 985, Sec. 1, eff. Sept. 1, 1989; Acts 1991, 72nd Leg., ch. 450, Sec. 2, eff. Aug. 26, 1991; Acts 1995, 74th Leg., ch. 76, Sec. 5.95(82), eff. Sept. 1, 1995; Acts 1999, 76th Leg., ch. 967, Sec. 2, eff. June 18, 1999.



Section  57.12.  Application Of Sunset Act.

(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, 2017.

(b)  If the corporation is abolished, the comptroller of public accounts shall serve as trustee to administer the assets of the corporation and satisfy all outstanding obligations.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1985, 69th Leg., ch. 479, Sec. 199, eff. Sept. 1, 1985; Acts 1985, 69th Leg., ch. 729, Sec. 15, eff. Sept. 1, 1985; Acts 1989, 71st Leg., ch. 985, Sec. 2, eff. Sept. 1, 1989; Acts 1991, 72nd Leg., 1st C.S., ch. 17, Sec. 6.05, eff. Nov. 12, 1991; Acts 1999, 76th Leg., ch. 967, Sec. 3, eff. June 18, 1999.

Amended by:

Acts 2005, 79th Leg., Ch. 221, Sec. 1, eff. September 1, 2005.



Section  57.13.  Composition Of Board Of Directors.

(a) The corporation is governed by a board of 11 directors in accordance with this section.

(b)  The governor, with the advice and consent of the senate, shall appoint 10 members to the board as follows:

(1)  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 of the faculty or administration of an eligible postsecondary educational institution, as defined by Section 57.46.

(c)  Appointments to the board shall be made without regard to the race, color, disability, sex, religion, age, or national origin of the appointees.

(d)  The comptroller of public accounts or the comptroller's designee shall serve as an ex officio voting member of the board.

(e)  Each member of the board must be a Texas resident.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1989, 71st Leg., ch. 985, Sec. 3, eff. Sept. 1, 1989; Acts 2003, 78th Leg., ch. 1170, Sec. 15.01, eff. Sept. 1, 2003.

Amended by:

Acts 2005, 79th Leg., Ch. 221, Sec. 2, eff. September 1, 2005.



Section  57.131.  Restrictions On Board Appointment, Membership, And Employment.

(a) In this section, "Texas trade association" means a cooperative and voluntarily joined statewide association of business or professional competitors in this state designed to assist its members and its industry or profession in dealing with mutual business or professional problems and in promoting their common interest.

(b)  A person may not be a member of the board and may not be a corporation employee employed in a "bona fide executive, administrative, or professional capacity," as that phrase is used for purposes of establishing an exemption to the overtime provisions of the federal Fair Labor Standards Act of 1938 (29 U.S.C. Section 201 et seq.) if:

(1)  the person is an officer, employee, or paid consultant of a Texas trade association of institutions that originate or hold student loans or a Texas trade association in the field of higher education; or

(2)  the person's spouse is an officer, manager, or paid consultant of a Texas trade association of institutions that originate or hold student loans or a Texas trade association in the field of higher education.

(c)  A person may not be a member of the board or act as the general counsel to the board or the corporation if the person is required to register as a lobbyist under Chapter 305, Government Code, because of the person's activities for compensation on behalf of a profession related to the operation of the corporation.

(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 is a member of the board of directors or an employee of an eligible lender that participates in the guaranteed student loan program.

(e)  Repealed by Acts 2005, 79th Leg., Ch. 221, Sec. 13(1), eff. September 1, 2005.

Added by Acts 1989, 71st Leg., ch. 985, Sec. 4, eff. Sept. 1, 1989.

Amended by:

Acts 2005, 79th Leg., Ch. 221, Sec. 3, eff. September 1, 2005.

Acts 2005, 79th Leg., Ch. 221, Sec. 13(1), eff. September 1, 2005.



Section 57.1311.  Training Program.

(a) A person who is appointed to and qualifies for office as a member of the board may not vote, deliberate, or be counted as a member in attendance at a meeting of the board until the person completes a training program that complies with this section.

(b)  The training program must provide the person with information regarding:

(1)  the provisions of this chapter 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.

Added by Acts 2005, 79th Leg., Ch. 221, Sec. 4, eff. September 1, 2005.



Section 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.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 2003, 78th Leg., ch. 1170, Sec. 15.02, eff. Sept. 1, 2003.

Amended by:

Acts 2005, 79th Leg., Ch. 221, Sec. 5, eff. September 1, 2005.



Section 57.141.  Removal Of Board Member.

(a) It is a ground for removal of an appointed member from the board that the member:

(1)  does not have at the time of taking office the qualifications required by Section 57.13(b);

(2)  does not maintain during service on the board the qualifications required by Section 57.13(b);

(3)  is ineligible for membership under Section 57.131;

(4)  cannot, because of illness or disability, discharge the member's duties for a substantial part of the member's term; or

(5)  is absent from more than half of the regularly scheduled board meetings that the member is eligible to attend during a calendar year without an excuse approved by a majority vote of the board.

(b)  The validity of an action of the board is not affected by the fact that it is taken when a ground for removal of a board member exists.

(c)  If the president has knowledge that a potential ground for removal exists, the president shall notify the presiding officer of the board of the potential ground.  The presiding officer shall then notify the governor and the attorney general that a potential ground for removal exists.  If the potential ground for removal involves the presiding officer, the president shall notify the next highest ranking officer of the board, who shall then notify the governor and the attorney general that a potential ground for removal exists.

Added by Acts 1989, 71st Leg., ch. 985, Sec. 5, eff. Sept. 1, 1989. Amended by Acts 1991, 72nd Leg., ch. 450, Sec. 3, eff. Aug. 26, 1991.

Amended by:

Acts 2005, 79th Leg., Ch. 221, Sec. 6, eff. September 1, 2005.



Section  57.15.  Vacancies.

(a) A member of the board vacates the office if the member ceases to be a member of the field from which he or she was appointed.

(b)  A vacancy on the board shall be filled by the original appointing authority for the remainder of the unexpired term.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979.



Section  57.16.  Expenses.

Members of the board serve without compensation but are entitled to reimbursement for actual and necessary expenses in attending meetings of the board or performing other official duties authorized by the chairman.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979.



Section  57.17.  Officers.

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 reelected.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979.



Section  57.18.  Meetings.

(a) The board may meet as often as necessary, but shall meet at least twice a year.

(b)  The board shall develop and implement policies that provide the public with a reasonable opportunity to appear before the board and to speak on any issue under the jurisdiction of the corporation.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1989, 71st Leg., ch. 985, Sec. 6, eff. Sept. 1, 1989.



Section  57.19.  President; Personnel.

(a) The board shall appoint a president to serve as chief executive officer in administering the corporation and carrying out the policies of the board. The president serves at the will of the board.

(b)  The board may appoint employees and may fix their compensation and prescribe their duties.

(c)  The board may delegate any of its powers to the president and corporation employees.

(d)  The president or the president's designee shall develop an intra-agency career ladder program. The program shall require intra-agency postings of all nonentry level positions concurrently with any public posting.

(e)  The president or the president's designee shall develop a system of annual performance evaluations. All merit pay for corporation employees must be based on the system established under this subsection.

(f)  The president or the president's designee shall prepare and maintain a written policy statement to assure implementation of a program of equal employment opportunity under which all personnel transactions are made without regard to race, color, disability, sex, religion, age, or national origin.  The policy statement must include:

(1)  personnel policies, including policies relating to recruitment, evaluation, selection, appointment, training, and promotion of personnel;

(2)  a comprehensive analysis of the corporation's work force that meets federal and state guidelines;

(3)  procedures by which a determination can be made of significant underuse in the corporation's work force of all persons for whom federal or state guidelines encourage a more equitable balance; and

(4)  reasonable methods to appropriately address those areas of significant underuse.

(g)  A policy statement prepared under Subsection (f) of this section must cover an annual period, be updated at least annually, and be filed with the governor's office.

(h)  The governor's office shall deliver a biennial report to the legislature based on the information received under Subsection (g) of this section. The report may be made separately or as part of other biennial reports made to the legislature.

(i)  The board shall develop and implement policies that clearly separate the policymaking responsibilities of the board and the management responsibilities of the president and the staff of the corporation.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1989, 71st Leg., ch. 985, Sec. 7, eff. Sept. 1, 1989; Acts 1991, 72nd Leg., ch. 450, Sec. 4, eff. Aug. 26, 1991.

Amended by:

Acts 2005, 79th Leg., Ch. 221, Sec. 7, eff. September 1, 2005.



Section  57.20.  Public Interest Information And Complaints.

(a) The corporation shall maintain a system to promptly and efficiently act on complaints filed with the corporation.  The 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.

(b)  The corporation shall make information available describing its procedures for complaint investigation and resolution.

(c)  The corporation shall periodically notify the complaint parties of the status of the complaint until final disposition.

(d)  Repealed by Acts 2005, 79th Leg., Ch. 221, Sec. 13(2), eff. September 1, 2005.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1989, 71st Leg., ch. 985, Sec. 8, eff. Sept. 1, 1989.

Amended by:

Acts 2005, 79th Leg., Ch. 221, Sec. 8, eff. September 1, 2005.

Acts 2005, 79th Leg., Ch. 221, Sec. 13(2), eff. September 1, 2005.



Section  57.21.  Programs Related To Student Financial Aid And Completion Of Postsecondary Education.

(a) The corporation shall take an active role in coordinating, facilitating, promoting, and providing assistance and support to:

(1)  programs designed to make available to the residents of this state information concerning postsecondary education awareness and the availability of student financial aid, including the Federal Family Education Loan Program, and to assist families in obtaining needed postsecondary education financing;

(2)  programs designed to prevent student loan default; and

(3)  programs designed to increase student retention and graduation rates in postsecondary education.

(b)  The corporation shall coordinate its efforts under this section with other entities, including the Texas Higher Education Coordinating Board, the Texas Education Agency, professional, educational, and civic associations, postsecondary educational institutions that participate in the corporation's programs, and lender advisory committees established under Section 57.461.

(c)  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 must outline how the corporation and the state agency will coordinate outreach activities to maximize resources and avoid duplication.

(d)  The corporation shall report to the legislature not later than December 1 of each even-numbered year regarding the level of demand for student financial aid for postsecondary education in this state.

Added by Acts 1999, 76th Leg., ch. 967, Sec. 4, eff. June 18, 1999.

Amended by:

Acts 2005, 79th Leg., Ch. 221, Sec. 9, eff. September 1, 2005.



Section 57.2105.  Technology Policy.

The board shall implement a policy requiring the corporation to use appropriate technological solutions to improve the corporation's ability to perform its functions.  The policy must ensure that the public is able to interact with the corporation on the Internet.

Added by Acts 2005, 79th Leg., Ch. 221, Sec. 10, eff. September 1, 2005.



Section  57.211.  Support Of Educational Purposes.

The corporation may support educational purposes with the approval of the board.

Added by Acts 1999, 76th Leg., ch. 967, Sec. 4, eff. June 18, 1999.



Section  57.22.  Application Of The Texas Non-profit Corporation Act.

(a) The corporation is subject to 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 Article 9.01 of that Act.

(b)  Subsection (a)(1) does not prohibit the corporation from supporting educational purposes under Section 57.211.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1995, 74th Leg., ch. 238, Sec. 1, eff. Sept. 1, 1995; Acts 1999, 76th Leg., ch. 967, Sec. 5, eff. June 18, 1999.



Section  57.23.  Liabilities Of The Corporation.

Liabilities created by the corporation are not debts of the state and the corporation may not secure any liability with funds or assets of the state except as otherwise provided by law.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979.



Section  57.24.  Authority To Participate In Other Revenue-generating Activities; Limitations.

(a) The corporation may 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; and

(2)  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 perform additional services, the corporation may not require postsecondary educational institutions or students to use those services unless required by state or federal law.

Added by Acts 1989, 71st Leg., ch. 985, Sec. 9, eff. Sept. 1, 1989. Amended by Acts 1991, 72nd Leg., ch. 450, Sec. 5, eff. Aug. 26, 1991; Acts 1995, 74th Leg., ch. 238, Sec. 2, eff. Sept. 1, 1995.



Subchapter C. Student Loans

Section  57.41.  Guaranteed Student Loans. (a)

The corporation shall guarantee 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. Sec. 1001 et seq., as amended.

(b)  The corporation may prescribe the terms and conditions on which the loans are to be guaranteed. In prescribing those terms and conditions, the board shall take into consideration the need to encourage lenders to make loans while at the same time maintaining the fiscal integrity of the program.

(c)  The corporation shall make loans to eligible students, as a lender of last resort, under the following conditions:

(1)  the borrower certifies and provides evidence to the corporation that the borrower has made an application to at least two qualified lenders and was unable to obtain a guaranteed student loan from a commercial lender and is not aware of any eligible lender in this state that is willing to make a guaranteed student loan;

(2)  the borrower also certifies to the corporation that the borrower was unable to obtain a guaranteed student loan from the Texas Higher Education Coordinating Board;

(3)  the corporation certifies that it is not aware of any eligible lender in this state that is willing to make a guaranteed student loan; and

(4)  the corporation must, to the extent a market is available, sell loans made as last resort loans within a reasonable period of time of the date of loan origination. This provision will not apply to any loans that cannot be sold at par. The corporation shall maintain a separate file showing the name and address of the student receiving such a loan and the name and address of the involved educational institution.

(d)  The corporation may participate in revenue-generating activities as provided for in Section 57.24 of this code.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1985, 69th Leg., ch. 64, Sec. 1, eff. Sept. 1, 1985; Acts 1989, 71st Leg., ch. 985, Sec. 10, eff. Sept. 1, 1989; Acts 1991, 72nd Leg., ch. 450, Sec. 6, eff. Aug. 26, 1991; Acts 1999, 76th Leg., ch. 967, Sec. 6, eff. June 18, 1999.



Section  57.42.  Reinsurance.

The corporation may enter into an agreement with the United States Department of Education for reinsurance against loss under the loan program due to death, disability, or default of the borrower.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1991, 72nd Leg., ch. 450, Sec. 7, eff. Aug. 26, 1991.



Section  57.43.  Insurance Premiums.

The corporation may impose and collect insurance premiums from eligible borrowers in an amount not to exceed the maximum allowable under the Higher Education Act of 1965, as amended.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1989, 71st Leg., ch. 985, Sec. 11, eff. Sept. 1, 1989; Acts 1991, 72nd Leg., ch. 450, Sec. 8, eff. Aug. 26, 1991; Acts 1999, 76th Leg., ch. 967, Sec. 7, eff. June 18, 1999.



Section  57.44.  Eligible Borrowers. (a)

In order to be eligible for a loan to be guaranteed under this chapter, a person must be an eligible borrower as provided under the Higher Education Act of 1965, 20 U.S.C. Sec. 1001 et seq., as amended.

(b)  For a student borrower to be an eligible borrower, the student borrower must:

(1)  be accepted for enrollment or be in good standing, as determined by the institution, at an eligible postsecondary educational institution;

(2)  be registered for or enrolled in at least one-half the normal full-time course load, as determined by the institution; and

(3)  have executed a promissory note for a loan that is eligible for reinsurance by the United States Department of Education.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1991, 72nd Leg., ch. 450, Sec. 9, eff. Aug. 26, 1991.



Section  57.45.  Eligible Lenders.

(a) In order to qualify as an eligible lender under this subchapter, the lender must:

(1)  be an eligible lender for purposes of the Higher Education Act of 1965, as amended; and

(2)  enter into an agreement with the corporation for participation in the program.

(b)  In contracting with the corporation, the eligible lender shall agree to adhere to the lending requirements of the corporation and to periodic review of guaranteed student loan accounts as considered necessary by the corporation.

(c)  Each eligible lender shall submit to the corporation at the end of each fiscal year a report on the student loan accounts of that lender.

(d)  In accordance with federal and state law, the corporation may provide, and charge a fee for, services to eligible lenders necessary to encourage lender participation in the loan program. Services for which the corporation charges a fee shall be provided at the option of the lender.

(e)  In order to be guaranteed by the corporation, a loan made by an eligible lender must comply with all provisions of the Higher Education Act of 1965, as amended, including provisions relating to:

(1)  limits on annual loan amounts;

(2)  cumulative loan amount limits;

(3)  maximum interest rates;

(4)  grace periods;

(5)  repayment terms; and

(6)  deferment conditions.

(f)  The corporation may suspend or revoke the eligibility of a lender that the corporation determines is not in compliance with this chapter.

(g)  Loans guaranteed by the corporation may be assigned or transferred by the holders thereof to any eligible lender as provided by the Higher Education Act of 1965, as amended, notwithstanding the state in which the principal place of business of any such eligible lender is located. Any loan so assigned or transferred shall continue to be guaranteed by the corporation, and, in the event of default, the corporation shall pay the lender or holder under the provisions of the Higher Education Act of 1965, as amended.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1981, 67th Leg., p. 18, ch. 13, Sec. 2, eff. March 20, 1981; Acts 1989, 71st Leg., ch. 985, Sec. 12, eff. Sept. 1, 1989; Acts 1999, 76th Leg., ch. 967, Sec. 8, eff. June 18, 1999.



Section  57.46.  Eligible Institutions.

(a) In order to qualify as an eligible institution under this subchapter, a postsecondary educational institution must:

(1)  be an eligible institution for purposes of the Higher Education Act of 1965, as amended; and

(2)  be eligible for reinsurance of guaranteed loans by the United States Department of Education.

(b)  An otherwise eligible postsecondary educational institution may be located anywhere.

(c)  The corporation may suspend or revoke the eligibility of an institution that the corporation determines is not in compliance with this chapter.

(d)  An eligible institution may withhold the academic transcript of a student borrower in default on a loan guaranteed under the Higher Education Act of 1965, 20 U.S.C. Sec. 1001 et seq., until notified by the loan holder that the borrower has entered into a satisfactory repayment agreement.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1991, 72nd Leg., ch. 450, Sec. 10, eff. Aug. 26, 1991.



Section  57.461.  Postsecondary Educational Institutions And Lender Advisory Committees.

(a) The corporation shall establish:

(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.

Added by Acts 1989, 71st Leg., ch. 985, Sec. 13, eff. Sept. 1, 1989. Amended by Acts 1999, 76th Leg., ch. 967, Sec. 9, eff. June 18, 1999.



Section  57.47.  Suits On Default. (a)

If a student borrower defaults on a loan and the corporation is required to honor the guarantee, the corporation 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. 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 County.

(c)  It is not a defense to a suit under this section that the defaulting party was a minor at the time the promissory note was executed or that the statute of limitations has expired.

(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.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1985, 69th Leg., ch. 871, Sec. 1, eff. Aug. 26, 1985; Acts 1989, 71st Leg., ch. 985, Sec. 14, eff. Sept. 1, 1989; Acts 1991, 72nd Leg., ch. 450, Sec. 11, eff. Aug. 26, 1991.



Section  57.471.  Appointment Of Master.

In any case under Section 57.47 of this code, the court may refer the case to a master in chancery. All matters relating to the appointment and service of the master are governed by Rule 171, Texas Rules of Civil Procedure, except that the case need not be exceptional as required by that rule.

Added by Acts 1985, 69th Leg., ch. 871, Sec. 2, eff. Aug. 26, 1985.



Section  57.48.  Payments By The Comptroller To Defaulting Persons Prohibited.

(a) Except as provided by Subsection (g), the corporation shall report to the comptroller the name of any person who is in default on a loan guaranteed under this chapter. The report must contain the information and be submitted in the manner and with the frequency required by rules of the comptroller.

(b)  Except as provided by this section, the comptroller, as a ministerial duty, may not issue a warrant or initiate an electronic funds transfer to a person who has been reported properly under Subsection (a).

(c)  Except as provided by this section, the comptroller may not issue a warrant or initiate an electronic funds transfer to the assignee of a person who has been reported properly under Subsection (a) if the assignment became effective after the person defaulted.

(d)  If this section prohibits the comptroller from issuing a warrant or initiating an electronic funds transfer to a person, the comptroller may issue a warrant or initiate an electronic funds transfer only as provided by this section to:

(1)  the person's estate;

(2)  the distributees of the person's estate; or

(3)  the person's surviving spouse.

(e)  This section does not prohibit the comptroller from issuing a warrant or initiating an electronic funds transfer to a person reported properly under Subsection (a) or to the assignee of the person if the corporation subsequently and properly reports to the comptroller that:

(1)  the person is complying with an installment payment agreement or similar agreement to eliminate the default, unless the corporation subsequently and properly reports to the comptroller that the person no longer is complying with the agreement;

(2)  the default is being eliminated by deductions of money from the person's compensation under the garnishment provisions of 20 U.S.C. Section 1095a, unless the corporation subsequently and properly reports to the comptroller that the default is no longer being eliminated by the deductions;

(3)  the default has been eliminated; or

(4)  the report of default was prohibited by Subsection (g) or was otherwise erroneous.

(f)  This section does not prohibit the comptroller from issuing a warrant or initiating an electronic funds transfer to pay:

(1)  the compensation of a state officer or employee; or

(2)  the remuneration of an individual if the remuneration is being paid by a private person through a state agency.

(g)  The corporation may not report a person under Subsection (a) unless the corporation first provides the person with an opportunity to exercise any due process or other constitutional or statutory protection that must be accommodated before the corporation may begin a collection action or procedure. The comptroller may not investigate or determine whether the corporation has complied with this prohibition.

(h)  This section does not prohibit the comptroller from issuing a warrant or initiating an electronic funds transfer if:

(1)  the warrant or transfer would result in a payment being made in whole or in part with money paid to the state by the United States; and

(2)  the state agency that administers the money certifies to the comptroller that federal law:

(A)  requires the payment to be made; or

(B)  conditions the state's receipt of the money on the payment being made.

(i)  This section does not prohibit the comptroller from issuing a warrant or initiating an electronic funds transfer to a person reported properly under Subsection (a) or to the person's assignee, the person's estate, the distributees of the person's estate, or the person's surviving spouse if the corporation consents to issuance of the warrant or initiation of the transfer.

(j)  The comptroller may adopt rules and establish procedures to administer this section.

(k)  In this section:

(1)  "Compensation" means base salary or wages, longevity pay, hazardous duty pay, benefit replacement pay, or an emolument provided in lieu of base salary or wages.

(2)  "State agency" means a board, commission, council, committee, department, office, agency, or other governmental entity in the executive, legislative, or judicial branch of state government. The term includes an institution of higher education as defined by Section 61.003, other than a public junior or community college.

(3)  "State officer or employee" means an officer or employee of a state agency.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1991, 72nd Leg., ch. 641, Sec. 1, eff. Sept. 1, 1991; Acts 1993, 73rd Leg., ch. 449, Sec. 20, eff. Sept. 1, 1993; Acts 1997, 75th Leg., ch. 1035, Sec. 21, 22, eff. June 19, 1997; Acts 1999, 76th Leg., ch. 1467, Sec. 1.01, eff. Jan. 1, 2000; Acts 2001, 77th Leg., ch. 1158, Sec. 5, eff. June 15, 2001.



Section  57.481.  Loan Default Prevention And Reduction.

(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 an active role in coordinating, facilitating, and providing technical assistance on guaranteed student loan default prevention and reduction initiatives and programs in the state and shall work with the appropriate state agencies and other entities, including eligible postsecondary educational institutions, eligible lenders, servicers, secondary markets, the Texas Higher Education Coordinating Board, the Central Education Agency, and state professional and occupational licensing agencies.

(c)  The corporation shall maintain a system of communication among the appropriate state agencies and entities to reduce loan default claims.

(d)  The corporation shall:

(1)  calculate the loan default rates for the postsecondary educational institutions that participate in the corporation's guaranteed student loan program; and

(2)  semiannually notify the postsecondary educational institutions of those loan default rates.

(e)  The corporation after consultation with eligible institutions and lenders and consistent with federal regulations and policies shall establish a loan default rate for a postsecondary educational institution or lender that, if exceeded, requires the corporation to intervene as provided by Subsection (f) of this section or permits the corporation to intervene as provided by Subsection (g) of this section.

(f)  If a postsecondary educational institution's loan default rate exceeds the rate established for the institution under Subsection (e) of this section, the corporation shall conduct program evaluations for the institution or provide technical assistance to the institution, or both.

(g)  If a postsecondary educational institution's or lender's loan default rate exceeds the rate established under Subsection (e) of this section, the corporation may require the institution or lender, as a condition of eligibility to participate in the corporation's guaranteed student loan program, to take one or more actions, including to require:

(1)  educational institutions to set tuition and fees refund policies for students who do not complete their course of study that:

(A)  are more beneficial to students; and

(B)  encourage repayment of student loans;

(2)  lenders to disburse loans to students in more installments than required by federal guidelines, to the extent permitted by federal law and federal guidelines; or

(3)  lenders to notify in clear language the affected postsecondary educational institutions and student borrowers if student loans are assigned or transferred to another eligible lender.

(h)  Before the corporation may require a postsecondary educational institution or lender to take any action under Subsection (g) of this section, the proposed action must be reviewed by the postsecondary educational institution or lender advisory committee established under Section 57.461 of this code, as appropriate.

Added by Acts 1989, 71st Leg., ch. 985, Sec. 15, eff. Sept. 1, 1989.



Section  57.482.  Payments By A State Agency To Defaulting Persons Prohibited.

(a) A state agency, as a ministerial duty, may not use funds inside or outside the state treasury to pay a person or the person's assignee if Section 57.48 prohibits the comptroller from issuing a warrant or initiating an electronic funds transfer to the person or assignee.

(b)  A state agency that is prohibited by Subsection (a) from making a payment to a person also is prohibited from paying any part of that payment to:

(1)  the person's estate;

(2)  the distributees of the person's estate; or

(3)  the person's surviving spouse.

(c)  The comptroller may not reimburse a state agency for a payment that the comptroller determines was made in violation of this section.

(d)  This section applies to a payment only if the comptroller is not responsible under Section 404.046, 404.069, or 2103.003, Government Code, for issuing a warrant or initiating an electronic funds transfer to make the payment.

(e)  In this section, "state agency" has the meaning assigned by Section 57.48.

Added by Acts 1999, 76th Leg., ch. 1467, Sec. 1.02, eff. Jan. 1, 2000.



Section  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 default prevention. 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.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1999, 76th Leg., ch. 967, Sec. 10, eff. June 18, 1999.



Section  57.491.  Loan Default Ground For Nonrenewal Of Professional Or Occupational License.

(a) In this section:

(1)  "License" means a certificate or similar form of permission issued or renewed by a licensing agency and required by law to engage in a profession or occupation.

(2)  "Licensee" means a person to whom a licensing agency issues a license.

(3)  "Licensing agency" means a board, commission, department, or other agency in the executive branch of state government that issues or renews a license.

(b)  The corporation shall identify the licensing agencies subject to this section and provide written notice to those agencies of the requirements prescribed by this section. Only those licensing agencies that the corporation identifies and that receive such notice are required to carry out this section.

(c)  Annually, each licensing agency shall prepare a list of the agency's licensees and submit the list to the corporation in hard copy or electronic form.  Using the submitted lists, the corporation periodically shall:

(1)  identify the persons who are in default on loans guaranteed by the corporation; and

(2)  provide a list of the names of those persons to the appropriate licensing agencies in hard copy or electronic form.

(d)  A person who is in default on a loan may enter an agreement with the corporation for repayment of a defaulted loan as required under this section. The corporation shall provide the person with a certificate certifying that the person has entered a repayment agreement on the defaulted loan.

(e)  A licensing agency shall not renew the license of a licensee whose name is on the list provided by the corporation under Subsection (c) unless  the licensee presents to the agency a certificate issued by the corporation certifying that:

(1)  the licensee has entered a repayment agreement on the defaulted loan; or

(2)  the licensee is not in default on a loan guaranteed by the corporation.

(f)  Repealed by Acts 2005, 79th Leg., Ch. 221, Sec. 13(3), eff. September 1, 2005.

(g)  A licensing agency shall not renew the license of a licensee who defaults on a repayment agreement unless the person presents to the agency a certificate issued by the corporation certifying that:

(1)  the licensee has entered another repayment agreement on the defaulted loan; or

(2)  the licensee is not in default on a loan guaranteed by the corporation or on a repayment agreement.

(h)  A licensing agency shall provide written notice of the nonrenewal policies established under Subsections (e) and (g) to each applicant for a license or for renewal of a license.  The corporation shall provide written notice of those same policies on each loan application form provided by the corporation and on each promissory note signed by a borrower.  Failure to provide the notice required by this subsection does not affect the default status of a borrower or the prohibitions on renewal of a license held by a person in default.

(i)  A licensing agency shall provide an opportunity for a hearing to a licensee before the agency takes action concerning the nonrenewal of a license under this section.

(j)  Each licensing agency shall adopt any rules necessary to carry out the licensing agency's duties under this section.

(k)  The board shall establish procedures to carry out the corporation's duties under this section.

(l)  This section does not apply to the State Securities Board.

Added by Acts 1989, 71st Leg., ch. 985, Sec. 16, eff. Sept. 1, 1989.

Amended by:

Acts 2005, 79th Leg., Ch. 221, Sec. 11, eff. September 1, 2005.

Acts 2005, 79th Leg., Ch. 221, Sec. 13(3), eff. September 1, 2005.



Section  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.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1989, 71st Leg., ch. 985, Sec. 17, eff. Sept. 1, 1989.



Subchapter D. Fiscal Provisions

Section  57.71.  Reserve And Operating Funds. The

corporation shall establish reserve and operating funds in accordance with Section 422 of the Higher Education Act of 1965 (20 U.S.C. Section 1072), as amended.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1999, 76th Leg., ch. 967, Sec. 11, eff. June 18, 1999.



Section  57.75.  Tax Exemption.

All income, property, and other assets of the corporation are exempt from taxation by the state and political subdivisions of the state.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979.



Section  57.76.  Annual Audit.

(a) At least once each year the corporation shall have a fiscal audit performed by a certified public accountant.

(b)  A copy of the annual audit shall be submitted to the state auditor for review. The state auditor may:

(1)  examine any working papers from the annual audit; and

(2)  conduct a separate audit if, after reviewing the independent audit, the state auditor considers a separate audit necessary.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1985, 69th Leg., ch. 871, Sec. 4, eff. Aug. 26, 1985; Acts 1989, 71st Leg., ch. 985, Sec. 18, eff. Sept. 1, 1989.



Section  57.761.  Internal Auditor.

(a) The board shall appoint an internal auditor for the corporation.  The internal auditor serves at the will of the board, and the internal auditor's budget, audit plans, and staffing levels must be approved by the board.

(b)  The internal auditor shall report to the board or a board committee designated by the board.  The board may require the internal auditor to submit to the board certain reports specified by the board.

(c)  The internal auditor shall consult with the board or board committee on a regular basis at board or committee meetings.  At the meetings, the internal auditor shall provide to the board or committee information regarding the progress and results of the internal auditor's audits under this section.

(d)  The internal auditor shall examine the corporation's system of internal controls and its system of identifying fixed and variable costs, including administrative costs.

Added by Acts 1989, 71st Leg., ch. 985, Sec. 19, eff. Sept. 1, 1989. Amended by Acts 1995, 74th Leg., ch. 238, Sec. 3, eff. Sept. 1, 1995.

Amended by:

Acts 2005, 79th Leg., Ch. 221, Sec. 12, eff. September 1, 2005.



Section  57.77.  Annual Report.

(a) The corporation annually shall prepare a written report on the financial and program operations of the corporation. The report shall include the audited financial statement for the year, the number and dollar value of loans guaranteed during the year, and the total dollar value of outstanding guaranteed loans.

(b)  The corporation shall submit the annual report to the governor, lieutenant governor, speaker of the house of representatives, comptroller of public accounts, and commissioner of higher education.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 5.14, eff. Sept. 1, 1997.



Section  57.78.  Investments.

All money of the corporation may be invested in accordance with Chapter 2256, Government Code.

Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1999, 76th Leg., ch. 967, Sec. 12, eff. June 18, 1999.


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