CHAPTER 57. GUARANTEED STUDENT LOANS

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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.

(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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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).

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.

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.

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.

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.

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.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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