Untitled Texas Attorney General Opinion ( 1975 )

The Honorable Bevington Reed Opinion No. H; 747
Commissioner
Coordinating Board Re: -Contractual authority of
Texas College and University System the Coordinating Board, Texas
P. 0. Box 12788, Capitol Station College and University System,
Austin, Texas 78711 with respect to the cancellation
of educational loans.
Dear Dr. Reed:
Section 52.40 of the Texas Education Code was enacted by the ,Legislature
in 1975. It empowers the Coordinating Board to cancel the repayment of all or
part of certain student loans from the Texas Opportunity Plan Fund (extended by
authority of article 3, sections 50b and 50b-1 .of the Texas Constitution) if the
persons receiving the loans become employed by particular state agencies for
particular lengths of time. The constitutionality of the measure was considered
in Attorney General Letter Advisory No. 90( 1975).
Your letter to us notes that the 64th Legislature appropriated no money to
the Texas Opportunity Plan Fund to off-set the loss of money borrowers would
otherwise pay to the Fund if the loans were not cancelled. You are particularly
concerned about the effect of such cancellations on Texas College Student Loan
Bonds to be repaid from the Texas Opportunity Plan Fund, and ask if the Board
may enter contracts to cancel loans in the absence of an effective legislative “off-
set” appropriation.
We do not think a legislative “off-set” appropriation is critical. The Con-
stitution itself, in subsection (charticle 3, section 50b, appropriates money in
these words:
While any of the bonds, or interest on said bonds
authorized by this Section is outstanding and un-
paid, there is hereby appropriated out of the first
monies coming into the Treasury in each fiscal
year, not otherwise appropriated by this Constitu-
tion, an amount sufficient to pay the principal and
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The Honorable Bevington Reed - page two (H-747)
interest on such bonds that mature or become
due during such fiscal year, less the amount in
the sinking fund at the close of the prior fiscal
year.
The Constitutional provision does everything that a legislative act could
do to “off-set” a potential loss of income to the Fund insofar as the protection
of bondholders is concerned. It automatically appropriates every year the full
amount necessary for the retirement of bond indebtedness during the year. Cf.
Lightfoot v. Lane, 140 S.W. 89 (Tex. Sup. 1911); Attorney General Constitutional
Advisory No. 6( 1974).
We are, therefore, of the opinion that the Coordinating Board may enter into
cancellation contracts whether or not a legislative “off-set” appropriation has
been made. Further, the Board would not be authorized to require. that contract
terms be in any way dependent upon a legislative “off-set” appropriation because
in our opinion the statute does not contemplate such a contractual requirement.
Subsection (c) of section 52.40 of the Texas Education Code mandatorily states:
The legislature shall appropriate to the Texas
Opportunity Plan Fund an amount equal to the
loans and interest cancelled pursuant to the pro-
visions of this section.
However, the availability to students of loan cancellation contracts. is not made
contingent on a legislative appropriation.
You also ask if a cancellation contract may be made between the Board and
an otherwise eligible borrower whose beginning repayment date has been delayed
until after September 1, 1975, the effective date of section 52.40. The beginning
repayment date for student loans may fall after September 1 either because the
student’s original loan repayment obligation begins after that date or because the
beginning repayment date has been extended by the Board (pursuant to section
52. 38 of the Texas Education Code) due to unusual financial hardship, military
service, Peace Corps service, or other special circumstance.
Section 52. 40 reads, in pertinent part:
(a) The board may cancel the repayment of a
loan received by a’ student who earns [certain
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The Honorable Bevington Reed - page three (H-747)
rofessional degrees] and who is employed by
Pcertain state agencies] prior to the date on
which repayment of the loan is to commence.
The statute expressly sets up only two eligibility criteria: (1) the student
borrower must have earned one of the professional degrees named, and (2)
he must be employed by one of the named agencies prior to the date on which
repayment of the loan is to commence. In our opinion there is no express or
implied requirement in section 52.40 that would negate the authority of the Board
found in section 52. 38 of the Education Code, to exercise discretion in extending
beginning repayment dates. See 53 Tex. Jur. 2d, Statutes 5 185. We believe the
two sections should be read together and we answer the question in the affirma-
tive: cancellation contracts may be made with such persons if they are other-
wise eligible.
SUMMARY
The Coordinating Board, Texas College and
University System, may enter into student
loan cancellation contracts pursuant to section
52.40, Texas Education Code, even in the
absence of legislative “off-set” appropriations,
and may not contractually make cancellations
dependent upon them. Student borrowers if
otherwise eligible are eligible for cancellation
contracts if the beginning repayment dates of
their loan are subsequent to September 1, 1975.
Very truly yours,
Attorney General of Texas
Opinion Committee
jad:
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