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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