                     The Attorney              General          of Texas
                                         June 18,      1979

MARKWHITE
AttorneyGeneral

                  Honorable E. D. Walker                      Opinion No. MW-25
                  Chencellor
                  University of Texas System                  Re: Assignment to the United
                  201 west 7th street                         States of rights under lonns deemed
                  Austin, Texas ‘78701                        uncollectible under the National
                                                              Defense Direct. Student Loen pro-
                                                              gram.

                  Deer Chancellor Walker:

                         Yoii have requested our-opinion regerdii the authority of University
                  of Texas component institutions to assign to the United States the rights
                  under loans deemed .uncollectible under the National Defense Direct Student
                  Loen Prc%ram. @ 20 USC SlO87aaet seq.; 45 CPR SSl44.l-l44.64. You
                  state that the Department of Health, Education dc Welfare encouqes such
                  assignment by exemptii        these loans from the computation of the
                  institution’s~loan default rate.    A low default rate is e prerequisite for
                  continued participation in the program. Prior to en assignment, evidence
                  must appear .in the -borrower’s file that, the institution has exercised due
                  diligence in attempting to collect the loan.          You ask whether this
                  assignment of uncollectible loans contravenes article 3, section 51 of the
                  Texas Constitution, which prohibits the makingof any grant of public money
                  “to any individual, association of individuals, municipal or other corporation
                  whatsoever?

                         Siice continued participation requires that en institution comply v&h
                  federal default standards, and since assignment of uncollectible loans is a
                  principal means of compliance, we believe it is clear that, in making the
                  assignment, the state ‘receives a substantial benefit.




                  Control District v. Mann, 140 S.W.2d 1098(Tex. 1940); and Attorney General
                  Opinion H-1033 U977). We ,eonclude therefore that e public indtution .pf
                  higher education is not prohibited from assisning to the United States
                  student loans deemed uncollectible.




                                                  p.    77
Honorable E. D. Welker   -    Page Two   WW-25)




                         ::
                                    SiiMMARY       ,’

     A public institution of higher e&cation is not prohibited from assigning to the
United States student loans deemed uncollectible.




                                          MARK WHITE
                                          Attornev General of Texas

JOHN W. FAINTER,JR.
First Assistant Attorney General
