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A new student loan system on the horizon in Texas?

By Benjamin Guthrie
On November 7, 2011

Students who have interest in student loans may want to take note of this article, as it addresses a proposed amendment to the Texas Constitution that would change the way students attain financial aid at the state level.

The ballot text for the proposed amendment to be voted on today (Nov.8) reads as follows: "The constitutional amendment

providing for the issuance of general obligation bonds to the State of Texas to finance educational loans to students."

Aaah!  Ring the constitutional amendment alarm! The oil-slick fat cats in cowboy hats that comprise the Texas Legislature are after our freedom again!  Aaaah!

Except for the fact that they're not, and the upcoming popular vote to amend the constitution of Texas is designed to increase accessibility to financial aid without raising the amount of money borrowed by the state [taxpayers] to do so.

How, you may ask, is it possible for such a system to exist?  

The solution lies in the way our state issues bonds to finance student loans.  Let's take a look at the issue.

At this point, the Texas legislature, by popular vote, has issued $1.86 billion in bonds for the purpose of increasing the accessibility of higher education.  Once those bonds are paid in full, voter consent is necessary to issue new bonds.  Today, only $275 million in those bonds are unissued and accessible. I just received $1,000 of that this morning.  Tick-tock.  To add to the situation, the current congressional session is set to cut the amount of state money dedicated to financial aid.

Senator Royce West D-Dallas,  drafted a solution to this dilemma in the form of Proposition 3: Automatically replace bonds that have been paid in full with new bonds for new borrowers.  The debt ceiling remains unchanged, while new students seeking financial aid will be able to access loans with no hiccups in the bureaucracy due to there being no bonds left until an expensive popular vote is carried out.

Critics of this proposition cite the alleviation of voter responsibility in the issuance of bonds as an infringement upon voter rights, and cite it as an example of taxation without representation.

Whether Proposition 3 is a boon for loan distribution efficiency or an attack on taxpayer rights is for you, the voter, to decide on November 8.


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