Bill Text: TX HB2705 | 2017-2018 | 85th Legislature | Introduced


Bill Title: Relating to alternative education loans and to the use of higher education private activity bonds by qualified alternative education loan lenders.

Spectrum: Slight Partisan Bill (Republican 3-1)

Status: (Introduced) 2017-04-19 - Left pending in committee [HB2705 Detail]

Download: Texas-2017-HB2705-Introduced.html
  85R5974 MM-F
 
  By: Lozano H.B. No. 2705
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to alternative education loans and to the use of higher
  education private activity bonds by qualified alternative
  education loan lenders.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 53B.02(2), Education Code, is amended to
  read as follows:
               (2)  "Alternative education loan" means a loan other
  than a guaranteed student loan that is made:
                     (A)  to a student, a former student, or any other
  person for the benefit of the student or former student; and
                     (B)  [to or for the benefit of a student] for the
  purpose of financing or refinancing all or part of the student's or
  former student's cost of attendance at an accredited institution.
         SECTION 2.  Section 53B.12, Education Code, is amended to
  read as follows:
         Sec. 53B.12.  TERRITORY. (a)  The authority comprises only
  the territory included within the boundaries of the city or cities
  creating it.
         (b)  Subsection (a) does not restrict the ability of a
  qualified nonprofit corporation to:
               (1)  make, purchase, or refinance guaranteed student
  loans or alternative education loans inside and outside the
  territory described by that subsection, provided that those loans
  satisfy the requirements of Section 53B.47(b) and other applicable
  law; or
               (2)  otherwise operate within the corporation's area of
  service in accordance with this chapter.
         SECTION 3.  Section 53B.47, Education Code, is amended by
  amending Subsections (a), (b), (c), (f), and (h) and adding
  Subsection (h-1) to read as follows:
         (a)  An authority may, upon approval of the city or cities
  which created the same, issue revenue bonds or otherwise borrow
  money to obtain funds to [purchase or to] make, purchase, or
  refinance guaranteed student loans or alternative education
  loans.  Revenue bonds issued for such purpose shall be issued in
  accordance with and with the effect provided in this chapter.  Such
  bonds shall be payable from and secured by a pledge of revenues
  derived from or by reason of the ownership of guaranteed student
  loans or alternative education loans and investment income after
  deduction of such expenses of operating the loan program as may be
  specified by the bond resolution or trust indenture.
         (b)  An authority may cause money to be expended to make,
  [or] purchase, or refinance [for its account] guaranteed student
  loans that are guaranteed by the Texas Guaranteed Student Loan
  Corporation, other guaranteed student loans, or alternative
  education loans that are executed by or on behalf of students or
  former students who:
               (1)  are residents of this state; or
               (2)  have been admitted to attend an accredited
  institution within this state.
         (c)  The authority shall contract with a nonprofit
  corporation, organized under the laws of this state, whereby such
  corporation will provide the reports and other information required
  for continued participation in a [the federally guaranteed] loan
  program described by this subchapter [provided by the Higher
  Education Act of 1965, as amended, or in an alternative education
  loan program].
         (f)  A nonprofit corporation, whether acting at the request
  of a city or cities under Subsection (e) or acting as a servicer or
  administrator for another corporation that [purchases or] makes,
  purchases, or refinances guaranteed student loans or alternative
  education loans, or that on its own behalf issues securities or
  otherwise obtains funds to [purchase or] make, purchase, or
  refinance guaranteed student loans or alternative education loans,
  may:
               (1)  exercise the powers granted by Chapters 20 and 22,
  Business Organizations Code, and any provision of Title 1, Business
  Organizations Code, applicable to a nonprofit corporation;
               (2)  service loans [purchased or] made, purchased, or
  refinanced from its funds or contract with another person to
  service the loans;
               (3)  grant a security interest in a trust estate
  securing its securities; and
               (4)  make investments as authorized by Subsection (e).
         (h)  An alternative education loan may be made, purchased, or
  refinanced under this section only by or on behalf of a qualified
  alternative education loan lender. An alternative education loan
  may not be in an amount that exceeds the amount permitted under
  Section 144(b)(1)(B), Internal Revenue Code of 1986 [in excess of
  the difference between the cost of attendance and the amount of
  other student assistance to the student, other than loans under
  Section 428B(a)(1), Higher Education Act of 1965 (20 U.S.C. Section
  1078-2) (relating to parent loans), for which the student borrower
  may be eligible].  An alternative education loan covered by this
  subsection is subject to Chapter 342, Finance Code, as applicable,
  except that:
               (1)  the maximum interest rate on the loan may not
  exceed the rate permitted under Subchapter A, Chapter 303, Finance
  Code; and
               (2)  application and origination fees may be agreed to
  by the parties and assessed at the inception of the loan, provided
  that if any such fees constitute additional interest under
  applicable law, the effective rate of interest agreed to over the
  stated term of the loan may not exceed the rate allowed by
  Subchapter A, Chapter 303, Finance Code, and accrued unpaid
  interest may be added to unpaid principal at the beginning of the
  agreed repayment period at the borrower's option and in accordance
  with the terms of the agreement for purposes of determining the
  total principal amount due at the inception of the repayment
  period.
         (h-1)  A program of general application under this chapter
  for the making, purchasing, or refinancing of alternative education
  loans by a qualified alternative education loan lender in
  accordance with Section 144(b)(1)(B), Internal Revenue Code of
  1986, is a program approved by the state for purposes of Section
  144(b)(1)(B).
         SECTION 4.  Section 1372.002(a), Government Code, is amended
  to read as follows:
         (a)  For purposes of this chapter, a project is:
               (1)  an eligible facility or facilities that are
  proposed to be financed, in whole or in part, by an issue of
  qualified residential rental project bonds;
               (2)  in connection with an issue of qualified mortgage
  bonds [or qualified student loan bonds], the providing of financial
  assistance to qualified mortgagors [or students] located in all or
  any part of the jurisdiction of the issuer; [or]
               (3)  in connection with an issue of qualified student
  loan bonds, the providing of guaranteed student loans or
  alternative education loans that satisfy the requirements of
  Section 53B.47(b), Education Code; or
               (4)  an eligible facility or facilities that are
  proposed to be financed, in whole or in part, by an issue of bonds
  other than bonds described by Subdivision (1) or (2).
         SECTION 5.  Section 1372.022(a), Government Code, is amended
  to read as follows:
         (a)  If the state ceiling is computed on the basis of $75 per
  capita or a greater amount, before August 15 of each year:
               (1)  28.0 percent of the state ceiling is available
  exclusively for reservations by issuers of qualified mortgage
  bonds;
               (2)  8 percent of the state ceiling is available
  exclusively for reservations by issuers of state-voted issues;
               (3)  2.0 percent of the state ceiling is available
  exclusively for reservations by issuers of qualified small issue
  bonds and enterprise zone facility bonds;
               (4)  22.0 percent of the state ceiling is available
  exclusively for reservations by issuers of qualified residential
  rental project bonds;
               (5)  10.5 percent of the state ceiling is available
  exclusively for reservations by issuers of qualified student loan
  bonds authorized by Section 53B.47, Education Code[, that are
  nonprofit corporations able to issue a qualified scholarship
  funding bond as defined by Section 150(d)(2), Internal Revenue Code
  (26 U.S.C. Section 150(d)(2))]; and
               (6)  29.5 percent of the state ceiling is available
  exclusively for reservations by any other issuer of bonds that
  require an allocation.
         SECTION 6.  Section 1372.0281, Government Code, is amended
  by adding Subsection (c) to read as follows:
         (c)  The board shall allow an issuer participating in a
  student loan program established under Section 53B.47, Education
  Code, to use pro forma financial statements to satisfy all
  information requirements of this section that relate to financial
  matters.
         SECTION 7.  Section 1372.033, Government Code, is amended by
  adding Subsection (e) to read as follows:
         (e)  A qualified nonprofit corporation that receives a
  student loan bond allocation may use the allocation to make,
  purchase, or refinance alternative education loans as defined by
  Section 53B.02(2), Education Code.
         SECTION 8.  The change in law made by this Act to Chapter
  1372, Government Code, applies to the allocation of the available
  state ceiling under that chapter beginning with the 2017 program
  year.
         SECTION 9.  This Act takes effect September 1, 2017.
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