The Attorney General of Texas
June 18, 1979
MARKWHITE
AttorneyGeneral
Honorable E. D. Walker Opinion No. MW-25
Chencellor
University of Texas System Re: Assignment to the United
201 west 7th street States of rights under lonns deemed
Austin, Texas ‘78701 uncollectible under the National
Defense Direct. Student Loen pro-
gram.
Deer Chancellor Walker:
Yoii have requested our-opinion regerdii the authority of University
of Texas component institutions to assign to the United States the rights
under loans deemed .uncollectible under the National Defense Direct Student
Loen Prc%ram. @ 20 USC SlO87aaet seq.; 45 CPR SSl44.l-l44.64. You
state that the Department of Health, Education dc Welfare encouqes such
assignment by exemptii these loans from the computation of the
institution’s~loan default rate. A low default rate is e prerequisite for
continued participation in the program. Prior to en assignment, evidence
must appear .in the -borrower’s file that, the institution has exercised due
diligence in attempting to collect the loan. You ask whether this
assignment of uncollectible loans contravenes article 3, section 51 of the
Texas Constitution, which prohibits the makingof any grant of public money
“to any individual, association of individuals, municipal or other corporation
whatsoever?
Siice continued participation requires that en institution comply v&h
federal default standards, and since assignment of uncollectible loans is a
principal means of compliance, we believe it is clear that, in making the
assignment, the state ‘receives a substantial benefit.
Control District v. Mann, 140 S.W.2d 1098(Tex. 1940); and Attorney General
Opinion H-1033 U977). We ,eonclude therefore that e public indtution .pf
higher education is not prohibited from assisning to the United States
student loans deemed uncollectible.
p. 77
Honorable E. D. Welker - Page Two WW-25)
::
SiiMMARY ,’
A public institution of higher e&cation is not prohibited from assigning to the
United States student loans deemed uncollectible.
MARK WHITE
Attornev General of Texas
JOHN W. FAINTER,JR.
First Assistant Attorney General