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This week’s column is the third in a series outlining the proposed constitutional amendments on which Texas voters will decide on November 8. These amendments were joint resolutions that were passed during the recent legislative session; however, because they change the Texas Constitution, they need state-wide voter approval before they can take effect. The order that the amendments appear on the ballot has been randomly selected by the secretary of state. I will be providing information about the proposals in the order in which they will appear on the ballot. This information is taken from a report by the House Research Organization, a nonpartisan agency that provides information to the legislature.
Amendment No. 3 The constitutional amendment providing for the issuance of general obligation bonds of the state to finance educational loans to students.
This amendment would empower the legislature by general law to authorize the Texas Higher Education Coordinating Board to issue and sell state general obligation bonds for the purpose of financing student loans in the manner provided by law as long as the principal amount of outstanding bonds issued is at all times equal to or less than the aggregate principal amount of state general obligation bonds previously authorized for that purpose. It also would authorize the legislature to provide for the investment of bond proceeds and to establish and provide for the investment of an interest and sinking fund to pay the bonds. The proposed amendment would have the effect of continuing the existing Hinson-Hazelwood Student Loan Program, for which similar bonds have previously been authorized. Unlike the previous bond authorizations, the proposed amendment would not limit the total amount of bonds issued. Supporters say cuts in federal financial aid and the elimination of certain federal financial aid programs, together with expected reductions in available state grant programs, likely will increase the demand for student loans, and low-interest, fixed-rate loans, such as those offered under the Hinson-Hazelwood program. Such loans are the best alternative loans a student can get when federally subsidized or federally insured loans are insufficient or are not available. The program boasts relatively low default rates, interest rates competitive on a national level, and a long-standing record of success. Students issued loans under the program tend both to graduate and to repay money owed. In addition, existing law requires that the program be self-sustaining; regardless of the default rate, the program is obligated to pay back its debt service payments, which it does through student loan repayments funneled into a statutorily required interest and sinking fund. The state has never had to contribute any general revenue for bonds issued under the program, and even though the program is backed by the state's general obligation rating, it does not affect the constitutional debt limit due to its self-supporting nature. Opponents of the amendment point out that nationally, student loan debt presently exceeds credit card debt, and there is some concern that student loans are a potential catalyst for a widespread financial predicament similar to that relating to subprime mortgage loans. Ideally, state support of students pursuing higher education should be in the form of grant aid, not loans. You can view a complete list of the proposed constitutional amendments with analyses online at www.hro.house.state.tx.us. For more information regarding these propositions, you can contact my office by writing to P.O. Box 2910, Austin, TX 78768-2910 or by emailing me at larry.phillips@house.state.tx.us. My district office phone number is (903) 891-7297.