                          NEY     GENE




Honorable Ray A. Fowler       Opinion NO. c-769
Assistant Commissioner
Coordinating Board, Texas
  College and University System
Austin, Texas
                              Re: Whether the Coordina-
                                   ting Board, Texas
                                   College and University
                                   System is authorized
                                   to contract with
                                   insurance companies
                                   to insure the lives
                                   of student borrowers
                                   from the Texas Oppor-
                                   tunity Plan Fund, and
Dear Mr.,Fowler:                   related questions.

     In a recent letter to this department you requested
our opinion in regard to the following questions:

          "(1) Is it constitutionally proper and
     statutorily provided that the Coordinating
     Board, Texas College and University System
     purchase insurance on the life of the student
     borrower with the amount of said premium to be
     added to the balance of said student's account
     as authorized by the student's execution of one
     of the attached note forms?

          62) If the answer to question (1) is
     affirmative, is it constitutionally proper and
     statutorily provided that an advance from the
     Texas Opportunity Plan Fund be made from said
     fund derived initially by sale of constitutionally
     authorized bonds and later by repayment of
     loans by students, an amount of said insurance
     premiums from this fund? In doing so, it is
     understood that the charges for insurance
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Honorable Ray A. Powler, page 2 (C-769)


     premiums would be made to the individual
     student's loan balance and said balance would
     be repaid in accordance with the terms'of the
     note.

          (3) Is it constitutionally proper and
     statutorily provided that payment of such
     insurance premiums in the manner as described
     in (2) above be paid from the Texas Opportunity
     Plan Fund directly to the insurance carrier
     selected in accdrdance with Section 7, Article
     III, Chapter 101, Acts of the 59th Legislature,
     Regular Session, 19651"

     The questions you have asked involve the following
part of Article III, Section 50b of the Texas Constitution:

          "(b) All moneys received from the sale
     of such bonds shall be deposited in a fund
     hereby created .in the State Treasury to be
     known as the Texas Opportunity Plan Fund +o
     be administered bv the Coordinatinq Board,
     Texas Collese and University System ql: &s
     successor or successors to make loans to stu-
     dents who ~have~,beenadmitted to attend .any
     institution of higher education within the
     State of Texas, public or private, including
     Junior Colleges, which are recognized or
     accredited under terms Andyconditions pre-
     scribed by the Legislature, and to pay interest
     and principal on such bonds and provide a
     sinking fund therefor under such conditions
     as the Legislature may prescribe.* (emphasis
     added).

       In anticipation of the passage of the above con-
stitutional amendment, the Legislature enacted Article
26549,   Texas Civil Statutes (Acts 59th Leg., R.S. 1965,
ch. 101, P. 229) which provides in part:

          "The Board may contract with any insurance
     company, or companies licensed to do business in
     Texas for insurance on the life of any student
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  . .




Honorable Ray A. Fowler,'page 3 (C-769)


        borrower in an amount sufficient to retire the
        principal and interest owed under a loan made as
        provided in this Act. The cost of such insurance
        shall be paid by the student borrower. Wo contract
        for insurance as provided for in ,thisSection may
        be approved except by the Board and during a
        regular meeting attended by a quorum of the total
        Board membership." (emphasis added).

     Article III, Section 5Ob, Subdivision (b) of the
Texas Constitution authorizes the Coordinating Board to
make loans to students and to administer the Texas
Opportunity Plan Fund. Pursuant to this constitutional
amendment, the Legislature enacted Article 2654g, supra,
which authorizes the Coordinating Board to contract with
any insurance company on the life of any student borrower
provided that the cost of such insurance is paid by the
student borrower.

     Therefore, the premium on this insur,ancemay ba paid
directly to any insurance company from Texas Opportunity
Plan Funds provided that such amount is made a part of the
total loan to the student. Thus, the cost of such insu-
rance is borne by the student borrower and is repaid by
him in accordance with the terms of the note.

                     SUMMARY

             Pursuant to the provisions of Article III,
        Section 5Ob, Texas Constitution and Article 2654g,
        V.C.S., the Coordinating Board, Texas College
        and University System has the authority to pur-
        chase insurance on the life of the student borrower
        and to pay premiums out of the Texas Opportunity
        Plan Fund directly to the insurance company pro-
        vided that the amount of the premium is included
        in the BBS executed by the student borrower.

                             Respectfully submitted,

                            WAGGGWRR CARR
                            Attorney General of Texas

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Honorable Ray A. Fowler, page 4 (C-769)




                               Assistant Attorney General

i4WW:ds

APPROVED:
OPINION COWMITTBE

W. V. Geppart, Chairman
John.Painter, Jr.
Robcrt~C. Flowers
Lewis'Berry
Bob Towery

APPROVED FOR THE   ATTORNEY   GENERAL

By:   T. B. Wright




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