The Honorable Bevington Reed

Commissioner Coordinating Board Texas College and University System P. 0. Box 12788, Capitol Station Austin, Texas 78711 Opinion No. H; 747
Re: -Contractual authority of the Coordinating Board, Texas College and University System, with respect tothe cancellation of educational loans.
Dear Dr. Reed:
Section 52.40 ofthe Texas Education Code was enacted by the ,Legislature in 1975. Itempowers the Coordinating Board to cancel the repayment ofall or part of certain student loans from the Texas Opportunity Plan Fund (extended by authority ofarticle 3,sections 50b and 50b-1 .ofthe Texas Constitution) ifthe persons receiving the loans become employed by particular state agencies for particular lengths oftime. The constitutionality ofthe measure was considered inAttorney General Letter Advisory No. 90(1975).
Your letter to us notes that the 64th Legislature appropriated nomoney to the Texas Opportunity Plan Fund to off-set the loss ofmoney borrowers would otherwise pay to the Fund ifthe 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 ifthe Board may enter contracts to cancel loans inthe absence ofan effective legislative “offset” appropriation.
We donot think alegislative “off-set” appropriation is critical. The Constitution 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 unpaid, there is hereby appropriated out ofthe first monies coming into the Treasury ineach fiscal year, not otherwise appropriated by this Constitution, an amount sufficient to pay the principal and

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interest on such bonds that mature or become due during such fiscal year, less the amount in the sinking fund atthe close ofthe prior fiscal year. The Constitutional provision does everything that alegislative act could doto “off-set” apotential loss of income to the Fund insofar as the protection ofbondholders is concerned. Itautomatically appropriates every year the full amount necessary for the retirement ofbond 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, ofthe opinion that the Coordinating Board may enter into cancellation contracts whether or not alegislative “off-set” appropriation has been made. Further, the Board would not be authorized to require. that contract terms be in any way dependent upon alegislative “off-set” appropriation because inour opinion the statute does not contemplate such acontractual requirement. Subsection (c) of section 52.40 ofthe Texas Education Code mandatorily states: The legislature shall appropriate tothe Texas Opportunity Plan Fund an amount equal tothe loans and interest cancelled pursuant tothe provisions ofthis section. However, the availability to students ofloan cancellation contracts. is not made contingent onalegislative appropriation.
You also ask ifa 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 1either 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. 38of the Texas Education Code) due to unusual financial hardship, military service, Peace Corps service, or other special circumstance.
Section 52. 40 reads, inpertinent part:

(a) The board may cancel the repayment ofa loan received by a’student who earns [certain

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# P rofessional degrees] andwho is employed by certain state agencies] prior to the date on which repayment ofthe loan is to commence. The statute expressly sets uponly two eligibility criteria: (1) the student borrower must have earned one ofthe professional degrees named, and (2) he must be employed by one ofthe named agencies prior to the date onwhich repayment ofthe loan is to commence. Inour opinion there is no express or implied requirement in section 52.40 that would negate the authority ofthe Board found in section 52. 38ofthe Education Code, to exercise discretion in extending beginning repayment dates. See 53 Tex. Jur. 2d, Statutes 5185. We believe the two sections should be read together andwe answer the question inthe affirmative: cancellation contracts may be made with such persons ifthey are otherwise 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 inthe absence oflegislative “off-set” appropriations, and may not contractually make cancellations dependent upon them. Student borrowers if otherwise eligible are eligible for cancellation contracts ifthe 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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