CHAPTER 57. GUARANTEED STUDENT LOANS
EDUCATION CODE
TITLE 3. HIGHER EDUCATION
SUBTITLE A. HIGHER EDUCATION IN GENERAL
CHAPTER 57. GUARANTEED STUDENT LOANS
SUBCHAPTER A. GENERAL PROVISIONS
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 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.
Sec. 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
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. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
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 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.
Sec. 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.
Sec. 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
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.