THE BATTALION
FRIDAY, APRIL 27, 1979
Page 3
5 Bryan join forces
ities to insure loans
By ROBIN THOMPSON
Battalion Staff
Texas A&M students may soon be
Up to take advantage of the Feder-
yInsured Student Loan program,
i commitment to create a non-
.rnfit organization to insure student
®^first presented to the College
mion City Council in March, was
proved Thursday night.
The approval came in the form ot
.unanimous vote to draft a joint
esolution with the Bryan City
louncil to form the organization.
' A similar vote was taken by the
Iryan City Council in October 1978
nd passed.
rM Logan, director of financial
id for Texas A&M University, said
in alBattalion story April 19 local
,anks have been unwilling to issue
loans because of government
tape.
The default rate for loans of this
type is 20 percent nationwide and
13 percent statewide.
But the creation of the organiza
tion may take these problems out of
the hands of area banks.
Plans for design for the organiza
tion would be formulated by
Hatcher and Co., a brokerage firm
from Dallas.
If the loan corporation is formed,
the board of directors of the organi
zation will be appointed by a com
mittee formed by the Bryan and
College Station city councils.
The directors would then issue
tax exempt revenue bonds. With
the money earned from these
bonds, they would buy 90-day-old
loans, at the same time assum
ing responsibility for the handling
and collection of them.
If a student were to default on a
loan, it would be repaid by the gov
ernment, according to the plan,
with no risk to local banks.
Logan said the loans are designed
to meet the needs of the student
from a middle-income family.
The loans, Logan said, are for
students whose parents are having a
“helluva time” putting their kids
through school.
Students from families living in
the Bryan-College Station who at
tend school elsewhere would also be
eligible for these loans.
The loans, which do not have to
paid back until after the student
graduates, can be made for up to
$2500 for undergraduates and up to
$7500 for graduates.
Students can take up to 10 years
after graduation to pay back the
loan.
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>nth
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■ United Press International
AUSTIN — The Senate Educa-
ion Committee voted unanimously
Wednesday in favor of abolishing
heW-cent state property tax, the
^■eds of which finance state col-
:ge I and university building
injects.
Members also approved, 6-2, a
:omplex plan opposed by the
schools that would eliminate the tax
constitutionally guarantee the
schools a multimillion-dollar build
ing fond.
Tile controversy involves how
much money is needed by colleges
for construction and whether the
University of Texas and Texas A&M
University should have increased
bonding authority. Also involved is
apossible federal court ruling on the
constitutionality of the state s 10-
centad valorem property tax.
The plan would give 22 state col
leges and universities $28.3 million
construction projects in 1980,
and more in following years. It
would also authorize the University
ofTexas and Texas A&M University
systems to borrow and spend an
extra $110 million.
Jut it is less than school officials
proposed and considerable con
troversy remains about how the
funds would be allocated.
Sen. A.R. Schwartz,
D-Galveston, urged the committee
to approve the proposal as a vehicle
to bring the controversy to the Se
nate floor for a vote.
“It’s not what the colleges want
the
the
For
the
Dto
;nts
ifla-
em-
but we re at a critical time. We’re
running out of time,” Schwartz said.
“We’ve got less than 30 working
days left in the legislative session.”
The panel also voted unanimously
for an alternative proposal to simply
abolish the state property tax with
out providing for a special fund to
provide building money for colleges
and universities.
Schwartz said he believes federal
courts are waiting to see what the
Legislature will do before ruling un-
The plan would give 22 state col
leges and universities $28.3 mil
lion for construction projects in
1980 and more in following
years. It would also authorize
the University of Texas and
Texas AirM University systems
to borrow and spend an extra
$110 million.
constitutional the state s 10-cent ad
valorem property tax on grounds
that assessments are not uniform
across the state.
The constitutional amendment
backed by Schwartz and Sen. R. L.
Vale, D-San Antonio, would give
the Legislature control over how
funds are allocated among the 22
colleges and universities that are not
part of the University of Texas or
Texas A&M systems.
Current provisions of the Texas
Constitution allocate proceeds of
the 10-cent ad valorem tax to a spe
cial fund. The 22 colleges are au
thorized to issue bonds against fu
ture proceeds of that fund to finance
construction projects.
Because the tax is under attack,
however, there is considerable
doubt the schools will ever see the
$48.7 million expected to be gener
ated by 1981.
Critics say the tax fund has gener
ated more building money than the
colleges need.
The amount of money to be allo
cated for college construction
projects under the Schwartz-Vale
proposal would be set at 5.1 percent
of the amount appropriated
statewide to operate the institu
tions. But the Legislature could
limit spending on building to less
than that amount.
The constitutional amendment
also would add nine components of
UT and Texas A&M to the list of
campuses eligible for building funds
from the $1.1 billion Permanent
University Fund and increase by
half the amount of Permanent Uni
versity Fund-backed bonds those
schools can issue.
Sen. Oscar Mauzy, D-Dallas, said
he opposed the Schwartz-Vale pro
posal because he disapproves of
constitutionally dedicated funds and
does not favor giving UT and Texas
A&M increased bonding authority.
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