NEY GENE 

Honorable Ray A. Fowler Opinion NO. c-769 

Assistant Commissioner 

Coordinating Board, Texas 

College and University System 

Austin, Texas 

Re: Whether the Coordinating Board, Texas 

Dear Mr.,Fowler: 

College and University 

System is authorized 

to contract with 

insurance companies 

to insure the lives 

of student borrowers 

from the Texas Opportunity Plan Fund, and 

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 students who ~have~,been admitted 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 Andy conditions prescribed 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 constitutional 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 ,this Section 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,ance may 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 insurance 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 purchase insurance on the life of the student borrower 

and to pay premiums out of the Texas Opportunity 

Plan Fund directly to the insurance company provided 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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