NEY GENE

Honorable Ray A. Fowler Opinion NO. c-769 Assistant Commissioner CoordinatingBoard, Texas College and University System Austin, Texas Re: Whether the Coordinating Board, Texas

Dear Mr.,Fowler: College and University System is authorized to contractwith insurance companies to insure the lives of studentborrowers from the Texas Opportunity Plan Fund, and related questions.
In a recent letter to this departmentyou requested our opinion in regard to the followingquestions:

"(1) Is it constitutionallyproper and statutorilyprovided 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 authorizedby the student'sexecution of one of the attachednote forms? 62) If the answer to question (1) is affirmative, is it constitutionallyproper and statutorilyprovided that an advance from the Texas Opportunity Plan Fund be made from said fund derived initiallyby sale of constitutionally authorizedbonds and laterby repayment of loansby students,an amount of said insurance premiums from this fund? In doing so, it is understood that the charges for insurance -3695-Honorable Ray A. Powler, page 2 (C-769)
premiums would be made to the individual student's loanbalance and said balance would be repaid in accordancewith the terms'of the note.(3) Is it constitutionallyproper and statutorilyprovided that payment of such insurancepremiums in the manner as described in (2)above be paid from the Texas Opportunity Plan Fund directly to the insurance carrier selected in accdrdancewith Section 7, Article III, Chapter 101,Acts of the 59th Legislature, Regular Session, 19651" The questionsyou 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 shallbe deposited in a fund hereby created .inthe State Treasury to be known as the Texas Opportunity Plan Fund +o be administeredbv the CoordinatinqBoard, Texas Collese and University System ql: &s successor or successors to make loans to studentswho ~have~,been admitted to attend .any institution of higher educationwithin the State of Texas, public or private, including Junior Colleges,which are recognized or accredited under terms Andyconditionsprescribedby 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 constitutional amendment, the Legislature enacted Article 26549, Texas Civil Statutes (Acts 59thLeg., R.S. 1965, ch. 101, P. 229)which provides in part:

"TheBoard may contractwith any insurance company, or companies licensed to do business in Texas for insurance on the life of any student -3696-. .

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

borrower in an amount sufficient to retire the principal and interest owed under a loanmade as provided in this Act. The cost of such insurance shallbe paid by the studentborrower. Wo contract for insurance as provided for in ,thisSectionmay be approved except by the Board and during a regularmeeting attendedby a quorum of the total Boardmembership." (emphasisadded). Article III, Section 5Ob, Subdivision (b) of the Texas Constitution authorizes the CoordinatingBoard to make loans to students and to administer the Texas Opportunity Plan Fund. Pursuant to this constitutional amendment, the Legislature enactedArticle 2654g, supra, which authorizes the CoordinatingBoard to contractwith any insurance company on the life of any studentborrower provided that the cost of such insurance is paid by the studentborrower. Therefore, the premium on this insur,ance may ba paid directly to any insurance company from Texas Opportunity Plan Funds provided that such amount ismade a part of the total loan to the student. Thus, the cost of such insurance isborne by the studentborrower and is repaid by him in accordancewith 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 purchase insurance on the life of the studentborrower and to pay premiums out of the **Texas** Opportunity Plan Fund directly to the insurance companyprovided that the amount of the premium is included in the BBS executedby the studentborrower. Respectfully submitted,
WAGGGWRR CARR Attorney General of Texas

-3697-HonorableRay 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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