Untitled Texas Attorney General Opinion ( 1966 )

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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