CHAPTER 187b

CONNECTICUT HIGHER EDUCATION
SUPPLEMENTAL LOAN AUTHORITY

Table of Contents

Sec. 10a-221. Declaration of policy.

Sec. 10a-222. Short title.

Sec. 10a-223. Definitions.

Sec. 10a-224. Executive director and board of directors of authority. Continuation of authority. Liability and indemnification.

Sec. 10a-225. Powers of authority. Use of authority loans. Reduction of principal and interest owed by participating institutions. Master promissory notes.

Sec. 10a-226. Payment of expenses.

Sec. 10a-227. Acquisition of property by authority.

Sec. 10a-228. Conveyance of title to participating institutions.

Sec. 10a-229. Notes of authority.

Sec. 10a-230. Bonds.

Sec. 10a-231. Trust agreement to secure bonds or notes.

Sec. 10a-232. Payment of bonds or notes. Creation of special capital reserve funds.

Sec. 10a-233. Fees.

Sec. 10a-234. Use of bond proceeds and revenues.

Sec. 10a-235. Enforcement of rights and duties.

Sec. 10a-236. Tax exemption.

Sec. 10a-237. Refunding bonds.

Sec. 10a-238. Investment of funds.

Sec. 10a-239. Bonds declared legal investments.

Sec. 10a-240. Report of authority.

Sec. 10a-241. Institutions of higher education authorized to take necessary action. Rate of interest.

Sec. 10a-242. Employee benefits.

Sec. 10a-243. Chapter supplemental to other laws. Power of authority not subject to supervision or regulation.

Sec. 10a-244. Chapter independent of Connecticut Student Loan Foundation.

Sec. 10a-245. Advisory committee.

Sec. 10a-246. Obligations of borrower.

Secs. 10a-247 to 10a-249. Reserved


Sec. 10a-221. Declaration of policy. It is declared that, for the benefit of the people of the state, the increase of their commerce, welfare and prosperity and the improvement of their health and living conditions, it is essential that this and future generations of youths be given the fullest opportunity to learn and to develop their intellectual capacity and skills. It is recognized that costs connected with collegiate education are increasingly burdensome and that it is essential that students attending institutions for higher education, and parents and others responsible for paying the costs thereof, be provided with lower cost financial assistance in order to help such students to achieve higher levels of learning and development of their intellectual capacity and skills. It is also recognized that Connecticut institutions for higher education should be provided with appropriate additional means to assist qualified students financially to achieve the required levels of learning and development of their intellectual capacity and skills. It is the purpose of this chapter and policy of the state to provide a measure of financial assistance to students in or from the state, their parents and others responsible for the costs of their education and an alternative method to enable Connecticut institutions for higher education to assist qualified students to attend such institutions, all to the public benefit and good, to the extent and manner provided herein.

(P.A. 82-313, S. 1, 28; P.A. 87-295, S. 1, 8; P.A. 06-196, S. 83.)

History: P.A. 87-295 provided that it is essential that students attending all institutions for higher education, rather than only institutions in the state be provided with lower cost financial assistance, added that the purpose of the chapter be to provide financial assistance to students from, as well as in, the state and made technical changes; P.A. 06-196 made technical changes effective June 7, 2006.

Sec. 10a-222. Short title. This chapter may be referred to and cited as the “Connecticut Higher Education Supplemental Loan Authority Act”.

(P.A. 82-313, S. 2, 28.)

Sec. 10a-223. Definitions. In this chapter, the following words and terms shall have the following meanings unless the context indicates another or different meaning or intent:

(1) “Authority” means the Higher Education Supplemental Loan Authority constituted as a subsidiary of the Connecticut Health and Educational Facilities Authority as provided in section 10a-179a;

(2) “Authorized officer” means an employee of the Connecticut Health and Educational Facilities Authority or of the authority who is authorized by the board of directors of the authority to execute and deliver documents and papers and to act in the name of and on behalf of the authority;

(3) “Authority loans” means education loans by the authority, or loans by the authority from the proceeds of bonds for the purpose of funding education loans;

(4) “Board” means the board of directors of the authority;

(5) “Bonds” or “revenue bonds” means revenue bonds or notes of the authority issued under the provisions of this chapter, including revenue refunding bonds or notes;

(6) “Bond resolution” means the resolution or resolutions of the authority and the trust agreement, if any, authorizing the issuance of and providing for the terms and conditions applicable to bonds;

(7) “Borrower” means a student and any parent who has received or agreed to pay an education loan;

(8) “Connecticut Health and Educational Facilities Authority” means the quasi-public authority established pursuant to section 10a-179;

(9) “Connecticut institution for higher education” means an institution for higher education within the state;

(10) “Default insurance” means insurance insuring education loans, authority loans or bonds against default;

(11) “Default reserve fund” means a fund established pursuant to a bond resolution for the purpose of securing education loans, authority loans or bonds;

(12) “Education loan” means a loan which is made by the authority to a student in or from the state, or the parents of such a student, or both, to finance the attendance of the student at an institution for higher education, or a loan by or on behalf of a participating institution for higher education from the proceeds of an authority loan, to a student, or the parents of a student, or both, to finance the student’s attendance at such institution;

(13) “Loan funding deposit” means moneys or other property deposited by a Connecticut institution for higher education with the authority, a guarantor or a trustee for the purpose of (A) providing security for bonds, (B) funding a default reserve fund, (C) acquiring default insurance, or (D) defraying costs of the authority, such moneys or properties to be in such amounts as deemed necessary by the authority or guarantor as a condition for such institution’s participation in the authority’s programs;

(14) “Institution for higher education” means a degree-granting educational institution within the United States authorized by applicable law to provide a program of education beyond the high school level and (A) described in Section 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, and exempt from taxation under Section 501(a) of said code with respect to a trade or business carried on by such institution which is not an unrelated trade or business, determined by applying Section 513(a) of said code to such organization or a foundation established for its benefit, or (B) exempt from taxation under said code as a governmental unit;

(15) “Participating institution for higher education” means a Connecticut institution for higher education which, pursuant to the provisions of this chapter, undertakes the financing directly or indirectly of education loans as provided in this chapter;

(16) “Parent” means any parent, legal guardian or sponsor of a student at an institution for higher education;

(17) “Education loan series portfolio” means all education loans made by the authority or by or on behalf of a specific participating institution for higher education which are funded from the proceeds of a related specific bond issue of the authority.

(P.A. 82-313, S. 3, 28; P.A. 87-295, S. 2, 8; P.A. 89-211, S. 19; P.A. 91-210, S. 1, 5; P.A. 93-96, S. 1; P.A. 12-149, S. 6.)

History: P.A. 87-295 included “education loans by the authority” in the definition of “authority loans”; added new Subsec. (f) defining “Connecticut institution for higher education” and renumbered the remaining Subsecs.; redefined “education loan” to include loans made by the authority; redefined “institution for higher education” to mean an institution in the United States rather than one in the state; redefined “participating institution for higher education” to mean a Connecticut institution; redefined “education loan series portfolio” to include loans made by the authority; and made technical changes; P.A. 89-211 clarified reference to the Internal Revenue Code of 1986; P.A. 91-210 amended Subsec. (k) to reflect changes in the definitions in the Internal Revenue Code of 1986; P.A. 93-96 made a technical amendment to Subsec. (k), defining “institution for higher education”; P.A. 12-149 redesignated Subdiv. (a) as Subdiv. (1) and amended same to redefine “authority”, added Subdiv. (2) defining “authorized officer”, redesignated Subdiv. (b) as Subdiv. (3), added Subdiv. (4) defining “board”, redesignated Subdivs. (c) to (e) as Subdivs. (5) to (7), added Subdiv. (8) defining “Connecticut Health and Educational Facilities Authority” and redesignated Subdivs. (f) to (n) as Subdivs. (9) to (17), effective July 1, 2012.

Sec. 10a-224. Executive director and board of directors of authority. Continuation of authority. Liability and indemnification. (a) The executive director of the Connecticut Higher Education Supplemental Loan Authority shall supervise the administrative affairs and technical activities of the authority in accordance with the directives of the board. The executive director shall keep a record of the proceedings of the authority and shall be custodian of all books, documents and papers filed with the authority, the minute book or journal of the authority, and its official seal. The executive director or another authorized officer may cause copies to be made of all minutes and other records and documents of the authority and may give certificates under the official seal of the authority to the effect that such copies are true copies, and all persons dealing with the authority may rely upon such certificates.

(b) (1) Five members of the board shall constitute a quorum. The affirmative vote of five of the members of the board shall be necessary for any action taken by the board. No vacancy in the membership of the board shall impair the right of a quorum of members to exercise all the rights and perform all the duties of the board. Any action taken by the board under the provisions of this chapter may be authorized by resolution at any regular or special meeting, and each such resolution shall take effect immediately and need not be published or posted. (2) The board of directors may delegate to three or more of its members such board powers and duties as it may deem proper. At least one of such members shall not be a state employee.

(c) Before the issuance of any bonds or notes under the provisions of this chapter, the chairman and vice-chairman of the board of directors, the executive director and any other member of the board authorized by resolution of the board to handle funds or sign checks of the authority and any other authorized officer shall execute a surety bond in the penal sum of fifty thousand dollars, or in lieu thereof the chairman shall obtain a blanket position bond covering the executive director and every member of the board and other employee or authorized officer of the authority in the penal sum of fifty thousand dollars. Each such bond shall be conditioned upon the faithful performance of the duties of the principal or the members, executive director and other authorized officers or employees, as the case may be, shall be executed by a surety company authorized to transact business in the state as surety, and shall be filed in the office of the Secretary of the State. The cost of each such bond shall be paid by the authority.

(d) The members of the board shall receive no compensation for the performance of their duties hereunder but each such member shall be paid the necessary expenses incurred by such member while engaged in the performance of such duties.

(e) (1) No member of the board or officer, agent or employee of the authority shall, directly or indirectly, have any financial interest in any participating institution for higher education or in any corporation, business trust, estate, trust, partnership or association, two or more persons having a joint or common interest, or any other legal or commercial entity contracting with the authority. Any individual who violates the provisions of this subsection shall be fined not less than fifty dollars or more than one thousand dollars or imprisoned not more than thirty days, or both.

(2) Notwithstanding the provisions of subdivision (1) of this subsection or the provisions of any other law, it shall not be or constitute a conflict of interest or violation of the provisions of said subdivision or the provisions of any other law for a trustee, director, officer or employee of a participating institution of higher education or for a person having the required favorable reputation for skill, knowledge and experience in state and municipal finance or for a person having the required favorable reputation for skill, knowledge and experience in the higher education loan finance field to serve as a member of the board; provided, in each case to which the provisions of this subdivision are applicable, such trustee, director, officer or employee of such participating institution of higher education abstains from discussion, deliberation, action and vote by the board in specific respect to any undertaking pursuant to this chapter in which such participating institution of higher education has a direct interest separate from the interests of all of the participating institutions generally, or such person having the required favorable reputation for skill, knowledge and experience in state and municipal finance abstains from discussion, deliberation, action and vote by the board in specific respect to any sale, purchase or ownership of bonds of the authority in which the investment banking firm or insurance company or bank of which such person is a partner, officer or employee has or may have a current or future interest, or such person having the required favorable reputation for skill, knowledge and experience in the higher education loan finance field abstains from discussion, deliberation, action and vote by the board in specific respect to any action of the authority in which any partnership, firm, joint venture, sole proprietorship or corporation of which such person is an owner, venturer, participant, partner, officer or employee has or may have a current or future interest.

(f) The board of directors of the authority shall adopt written procedures, in accordance with the provisions of section 1-121, for: (1) Adopting an annual budget and plan of operations, including a requirement of board approval before the budget or plan may take effect; (2) hiring, dismissing, promoting and compensating employees of the authority, including an affirmative action policy and a requirement of board approval before a position may be created or a vacancy filled; (3) acquiring real and personal property and personal services, including a requirement of board approval for any nonbudgeted expenditure in excess of five thousand dollars; (4) contracting for financial, legal, bond underwriting and other professional services, including a requirement that the authority solicit proposals at least once every three years for each such service which it uses; (5) issuing and retiring bonds, bond anticipation notes and other obligations of the authority; (6) awarding loans, grants and other financial assistance, including eligibility criteria, the application process and the role played by the authority’s staff and board of directors; and (7) the use of surplus funds to the extent authorized under this chapter or other provisions of the general statutes.

(g) The authority shall continue as long as it shall have bonds or other obligations outstanding and until its existence is terminated by law. Upon termination of the existence of the authority, all its rights and properties shall pass to and be vested in the state of Connecticut.

(h) The provisions of section 1-125, subsection (f) of section 10a-230 and this subsection shall apply to any officer, director or employee of the Connecticut Health and Educational Facilities Authority appointed as a director of the authority and to any employee of the Connecticut Health and Educational Facilities Authority who is an authorized officer of the authority. Any such person shall not be personally liable for the debts, obligations or liabilities of the authority as provided in said section 1-125. The authority shall, and the Connecticut Health and Educational Facilities Authority may, provide for the indemnification to protect, save harmless and indemnify such officer, director or employee of the Connecticut Health and Educational Facilities Authority as provided by said section 1-125.

(P.A. 82-313, S. 4, 28; P.A. 87-295, S. 3, 8; P.A. 88-266, S. 24, 46; May Sp. Sess. P.A. 04-2, S. 59; P.A. 07-108, S. 1; P.A. 11-48, S. 285; P.A. 12-80, S. 160; 12-149, S. 7.)

History: P.A. 87-295 in Subsec. (a) added the commissioner of higher education as a member of the authority and provided that he may designate a deputy or staff member to represent him, in Subsec. (d) increased the number of members required for a quorum from four to five, inserted “Connecticut” before institutions for higher education, expanded the provisions of Subsec. (g)(1), and made technical changes; P.A. 88-266 amended Subsec. (a) by specifying that authority is a political subdivision of the state and performs a governmental function and requiring powers of the authority to be vested in and exercised by a board of directors, amended Subsec. (b) to require chairperson of board to be appointed by governor with advice and consent of general assembly, amended Subsec. (c) to require executive director to supervise administrative affairs and technical activities of the authority, designated existing provisions of Subsec. (d) as Subdiv. (1) and added Subdiv. (2) re delegation of board powers and duties, amended references to board and authority in Subsecs. (a) to (g), inclusive, and added Subsec. (h) requiring board to adopt written procedures and Subsec. (i) re existence and termination of the authority. May Sp. Sess. P.A. 04-2 amended Subsec. (a) to add provision re appointment of “active or retired” trustees, directors, officers or employees of institutions for higher education to the board of directors, effective May 12, 2004, and applicable to any pledge, lien or security interest of this state or any political subdivision of this state in existence on October 1, 2003, or created after that date; P.A. 07-108 amended Subsec. (a) to delete restriction against more than one appointed member from a constituent unit, effective July 1, 2007; pursuant to P.A. 11-48, “Commissioner of Higher Education” was changed editorially by the Revisors to “president of the Board of Regents for Higher Education” in Subsec. (a), effective July 1, 2011; P.A. 12-80 amended Subsec. (g)(1) to rephrase penalty provision and replace maximum term of imprisonment of “one month” with “thirty days”; P.A. 12-149 deleted former Subsecs. (a) and (b) re creation of the authority and appointment of chairperson, executive director and assistant executive director and election of members of board of directors, redesignated existing Subsec. (c) as Subsec. (a) and amended same by making a technical change and replacing “assistant executive director or other person” with “another authorized officer”, redesignated existing Subsecs. (d) and (e) as Subsecs. (b) and (c), amended redesignated Subsec. (c) to add references to authorized officers, redesignated existing Subsecs. (f) and (g) as Subsecs. (d) and (e), amended redesignated Subsec. (e)(2) to make a technical change, redesignated existing Subsecs. (h) and (i) as Subsecs. (f) and (g) and added new Subsec. (h) re application of provisions of Sec. 1-125, Sec. 10a-230(f) and Subsec. to any officer, director or employee of the authority appointed as a director and to any employee of the authority who is an authorized officer, effective July 1, 2012.

Subsec. (a):

Cited. 230 C. 24.

Sec. 10a-225. Powers of authority. Use of authority loans. Reduction of principal and interest owed by participating institutions. Master promissory notes. (a) The purpose of the authority shall be to assist borrowers and Connecticut institutions for higher education in the financing and refinancing of the costs of education and for this purpose the authority is authorized and empowered:

(1) To adopt bylaws for the regulation of its affairs and the conduct of its business.

(2) To adopt an official seal and alter the same at pleasure.

(3) To maintain an office at such place or places in the state as it may designate.

(4) To sue and be sued in its own name, plead and be impleaded.

(5) To establish criteria and guidelines for education loan financing programs. Such criteria and guidelines shall include such eligibility standards for borrowers as the authority shall determine are necessary or desirable in order to effectuate the purposes of this chapter, including the following: (A) Each student shall have a certificate of admission or enrollment at an institution for higher education, (B) each student, or the parents of each student, shall satisfy such financial qualifications as the authority shall establish to effectuate the purposes of this chapter, and (C) each student, and the parents of each student, shall submit to the student’s institution for higher education or to the authority, as the authority may determine, such information as may be required by the authority.

(6) To establish specific criteria governing the eligibility of Connecticut institutions for higher education to participate in its programs, the making of authority loans and education loans, provisions for default, the establishment of default reserve funds, the purchase of default insurance, the provision by such institutions of prudent debt service reserves, the furnishing by Connecticut institutions for higher education and others of such additional guarantees of the education loans, authority loans or the bonds as the authority shall determine and any procedures for allocating authority loans among Connecticut institutions for higher education eligible for the program of the authority in order to effectuate the purpose of this chapter. All such criteria shall be established to assure the marketability of the bonds and the adequacy of the security for the bonds. The criteria governing the eligibility of Connecticut institutions for higher education shall include limitations upon the principal amounts and the terms of education loans and qualifications and characteristics of borrowers.

(7) To establish guidelines, criteria and procedures not in conflict with existing statutes with respect to authority loans, education loans and education loan series portfolios. Such guidelines, criteria and procedures shall not be construed as regulations within the scope of chapter 54.

(8) To receive and accept from any source loans, contributions or grants, including money, property, labor, and other things of value from any source for or in aid of an authority education loan financing program or any portion thereof and, when desirable, to use such funds, property or labor only for the purposes for which it was loaned, contributed or granted.

(9) To contract with guarantors, financial institutions or other qualified loan origination and servicing organizations, which shall assist in prequalifying borrowers for education loans and which shall service and administer each education loan. The authority may require that each borrower be charged a fee to defray the costs of origination, servicing and administration of education loans. The amount and method of collection of such fee shall be determined by the authority. Participating institutions for higher education may perform any of the acts described in this subdivision, or contract for their performance by others, if these acts are authorized by the authority.

(10) To contract with a guarantor to provide security for the payment of education loans through the issuance of insurance against default or to provide a guarantee of payment covering all or a portion of any education loan made by or on behalf of the authority or by or on behalf of a participating institution for higher education from the proceeds of an authority loan.

(11) To employ attorneys, accountants, consultants, financial experts, loan processors, banks, managers, and such other employees and agents as may be necessary in its judgment, and to fix their compensation.

(12) To make authority loans, including loans on which interest may accrue and periodically be added to the principal of such loan and be subject to additional interest, and to require that the proceeds be used in accordance with guidelines established by the authority for making education loans and paying costs and fees in connection therewith.

(13) To charge and equitably apportion among participating institutions for higher education its administrative costs and expenses incurred in the exercise of the powers and duties granted by this chapter.

(14) To borrow working capital funds and other funds as may be necessary for start-up and continuing operations, as long as such funds are borrowed in the name of the authority only. Such borrowings shall be limited obligations of the character described in section 10a-232 and shall be payable solely from revenues of the authority or the proceeds of bonds pledged for that purpose.

(15) Notwithstanding any other provisions of this chapter, to commingle and pledge as security for a series or issue of bonds, only with the consent of all of the Connecticut institutions for higher education which are participating in such series or issue: (A) The education loan series portfolios and some or all future education loan series portfolios of the authority or of such institutions for higher education, and (B) the loan funding deposits of such institutions, provided education loan series portfolios and other security and moneys set aside in any fund or funds pledged for any series of bonds or issue of bonds shall be held for the sole benefit of such series or issues separate and apart from education loan series portfolios and other security and moneys pledged for any other series or issue of bonds of the authority. Bonds may be issued in series under one or more resolutions or trust agreements in the discretion of the authority.

(16) To examine records and financial reports of institutions for higher education, and to examine records and financial reports of any person, organization or institution retained under subdivision (9), (10) or (11) of this subsection.

(17) To do all things necessary or convenient to carry out the purposes of this chapter. In carrying out the purposes of this chapter, the authority may issue bonds, the proceeds of which are used to make authority loans. In the event all or a portion of such proceeds are loaned to one or more participating institutions for higher education or to any combination of participating institutions for higher education, all other provisions of this chapter shall apply to and for the benefit of the authority and the participants in such joint project or projects. Any such joint participation requires the express approval of all participants.

(18) To make and enter into all contracts and agreements necessary or incidental to the performance of its duties and the execution of its powers under this chapter, including contracts and agreements for such professional services as the board of directors shall deem necessary, including, but not limited to, financial consultants, bond counsel, underwriters and technical specialists and investment agreements, as provided in section 10a-238.

(b) The authority shall require that authority loans be used solely for the purpose of education loans and in an amount not to exceed the total cost of attendance, less other forms of student assistance, as defined by the authority. In determining “other forms of student assistance” the authority may consider (1) grants received under any federal or state grant programs, (2) loan proceeds received under any federal or other state loan program, (3) scholarship, grants or other nonrepayable assistance received from government agencies, educational institutions or organizations, and (4) expected family contributions. The authority shall require that each borrower under an education loan shall use the proceeds solely for educational purposes and purposes reasonably related thereto.

(c) Whenever refunding bonds are issued to refund bonds the proceeds of which were used to make authority loans, the authority may reduce the amounts of principal or interest, or both, it is owed by the participating institution for higher education which had received authority loans from the proceeds of the refunded bonds. Such institutions may, or in accordance with guidelines established by the authority shall, use any reduced amount to reduce the amount of interest being paid on education loans which the institution has made pursuant to the authority loans from the proceeds of the refunded bonds.

(d) (1) The authority may develop and require the use of a master promissory note for education loans. Each master promissory note shall allow borrowers to receive, in addition to initial education loans, additional education loans for the same or subsequent periods of enrollment. Each master promissory note shall include a provision stating that the note shall be governed by and construed pursuant to the laws of the state of Connecticut.

(2) Notwithstanding any provision of the general statutes or any regulation adopted pursuant to said statutes, each education loan made under a master promissory note pursuant to this subsection may be sold or assigned independently of any other education loan made under the same master promissory note and each such loan shall be separately enforceable on the basis of an original or copy of the master promissory note in accordance with the terms of the master promissory note.

(3) Notwithstanding any provision of the general statutes, each such master promissory note shall be fully negotiable within the meaning and for all purposes of title 42a, regardless of whether the form and character of such master promissory note qualifies under the terms of the provisions of title 42a.

(4) The authority may pledge all or any part of its interest in any such master promissory note or the education loan evidenced by such note as security for any issue of bonds or notes or any other obligations. Such pledge shall be valid and binding from the time when the pledge is made; the interest so pledged by the authority shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of any such pledge shall be valid and binding against all parties having claims of any kind in tort, contract or otherwise against the authority or any participating institution for higher education, irrespective of whether such parties have notice of the lien. Such lien shall have priority over all other liens, including, without limitation, the lien of any person who in the ordinary course of business furnishes services or materials to the authority. Notwithstanding the provisions of title 42a, neither the bond resolution nor any financing statement, continuation statement or other instrument by which a pledge or security interest is created or by which the authority’s interest in such master promissory notes is assigned need be filed in any public records in order to perfect the security interest or lien thereof as against third parties. Any outright sale by the authority of any education loan evidenced by such a master promissory note shall be effective and perfected automatically upon attachment as defined in title 42a.

(P.A. 82-313, S. 5, 28; P.A. 87-295, S. 4, 8; P.A. 88-266, S. 25, 46; P.A. 93-96, S. 4; P.A. 94-180, S. 16, 17; P.A. 07-108, S. 2.)

History: P.A. 87-295 made the section conform with the definitions in Sec. 10a-223 as amended by P.A. 87-295 and made technical changes; P.A. 88-266 amended Subsec. (a) by requiring that guidelines, procedures, etc., not conflict with existing statutes in Subdiv. (7), specifying receipt of money, property, labor, and other things of value from any source is permitted in Subdiv. (8) and adding Subdiv. (18) re authorization and power to make and enter into contracts; P.A. 93-96 amended Subdiv. (18) to allow authority to enter into investment agreements; P.A. 94-180 amended Subsec. (a)(12) to specify that the loans include loans on which interest may accrue and periodically be added to the principal of the loan and be subject to additional interest, effective July 1, 1994; P.A. 07-108 added Subsec. (d) re master promissory notes, effective July 1, 2007.

Sec. 10a-226. Payment of expenses. All expenses incurred in carrying out the provisions of this chapter shall be payable solely from funds provided under the authority of this chapter and no liability or obligations shall be incurred by the authority hereunder beyond the extent to which moneys shall have been provided under the provisions of this chapter.

(P.A. 82-313, S. 6, 28.)

Sec. 10a-227. Acquisition of property by authority. The authority is authorized and empowered to establish specific guidelines relating to the deposits of certain moneys, endowments or properties by Connecticut institutions for higher education which would provide security for education loan funding programs, authority loans, education loans or for bonds and to establish guidelines relating to guarantees of or contracts to purchase education loans or bonds by such institutions or by financial institutions or others. A default reserve fund may be established for each series or issue of bonds. In this regard, the authority is empowered to receive such moneys, endowments, properties and guarantees as it deems appropriate and, if necessary, to take title in the name of the authority or in the name of a participating institution for higher education or a trustee.

(P.A. 82-313, S. 7, 28; P.A. 87-295, S. 5, 8.)

History: P.A. 87-295 inserted “Connecticut” before “institutions for higher education”.

Sec. 10a-228. Conveyance of title to participating institutions. When the principal of, interest on and premium, if any, due in connection with bonds of the authority issued to finance the cost of an education loan financing program or programs, including any refunding bonds issued to refund and refinance such bonds, have been fully paid and retired or when adequate provision has been made to fully pay and retire the same, and all other conditions of the bond resolution authorizing the same have been satisfied and the security interest or lien created by such bond resolution has been released in accordance with the provisions thereof, the authority shall promptly execute such deeds and conveyances as are necessary and required to convey any remaining moneys, properties and other assets comprising loan funding deposits to the participating institutions for higher education which furnished the same in proportion to the amounts furnished by the respective participating institutions for higher education.

(P.A. 82-313, S. 8, 28.)

Sec. 10a-229. Notes of authority. The authority may from time to time issue negotiable notes for any corporate purpose and may from time to time renew any notes by the issuance of new notes, whether the notes to be renewed have or have not matured. The authority may issue notes partly to renew notes or to discharge other obligations then outstanding and partly for any other purpose. The notes may be authorized, sold, executed and delivered in the same manner as bonds. Any resolution or resolutions authorizing notes of the authority or any issue thereof may contain any provisions which the authority is authorized to include in any resolution or resolutions authorizing revenue bonds of the authority or any issue thereof, and the authority may include in any notes, any terms, covenants or conditions which it is authorized to include in any bonds. Such resolution or resolutions may delegate to the executive director, assistant executive director, or any member of the board of directors of the authority or any combination of them, the power to determine any of the details of the notes and to award such notes to a purchaser or purchasers. All such notes shall be payable solely from the revenues of the authority, subject only to any contractual rights of the holders of any of its notes or other obligations then outstanding.

(P.A. 82-313, S. 9, 28; P.A. 88-266, S. 26, 46.)

History: P.A. 88-266 added reference to board of directors.

Sec. 10a-230. Bonds. (a) The authority may from time to time issue revenue bonds for any corporate purpose and all such revenue bonds, notes, bond anticipation notes or other obligations of the authority issued pursuant to this chapter shall be and are hereby declared to be negotiable for all purposes notwithstanding their payment from a limited source and without regard to any other law or laws. In anticipation of the sale of such revenue bonds, the authority may issue negotiable bond anticipation notes and may renew the same from time to time, but the maximum maturity of any such note, including renewals of such notes shall not exceed five years from the date of issue of the original note. Such notes shall be paid from any revenues of the authority available therefor and not otherwise pledged, or from the proceeds of sale of the revenue bonds of the authority in anticipation of which they were issued. The notes shall be issued in the same manner as the revenue bonds. Such notes and the resolution or resolutions authorizing the same may contain any provisions, conditions or limitations which a bond resolution of the authority may contain.

(b) The revenue bonds and notes of every issue shall be payable solely out of the revenues of the authority pertaining to the program relating to such bonds or notes including principal and interest on authority loans and education loans, and any other revenues derived from or in connection with any other authority loans and education loans, payments by participating institutions for higher education, banks, guarantors, insurance companies or others pursuant to letters of credit or purchase agreements, investment earnings from funds or accounts maintained pursuant to the bond resolution, insurance proceeds, loan funding deposits, proceeds of sales of education loans, proceeds of refunding bonds and fees, charges and other revenues, funds and other assets of the authority but subject only to any agreements with the holders of particular revenue bonds or notes pledging any particular revenues and subject to any agreements with any participating institution for higher education.

(c) The revenue bonds or notes may be issued as serial bonds or notes or as term bonds or notes, or the authority, in its discretion, may issue bonds or notes of both types. The revenue bonds or notes shall be authorized by resolution of the members of the board of directors of the authority and shall bear such date or dates, mature at such time or times, not exceeding the year following the last year in which the final payments in an education loan series portfolio are due, or thirty years from the date of issuance, whichever is sooner, from their respective dates, bear interest at such rate or rates, payable at such time or times, be in such denominations, be in such form either coupon or registered, carry such registration or conversion privileges, be executed with manual or facsimile signatures in such manner, be payable in lawful money of the United States at such place or places, and be subject to such terms of redemption, as such resolution or resolutions may provide. Such resolution or resolutions may delegate to the executive director, assistant executive director or any member of the board of directors of the authority, or any combination of them, the power to determine any of the matters set forth in this section and the power to award the bonds to a purchaser or purchasers at public sale or to negotiate a sale to a purchaser or purchasers. The revenue bonds or notes may be sold for such price or prices as the authority shall determine. Pending preparation of the definitive bonds, the authority may issue interim receipts or certificates which shall be exchanged for such definitive bonds.

(d) Any resolution or resolutions authorizing any revenue bonds or any issue of revenue bonds may contain provisions, which shall be a part of the contract with the holders of the revenue bonds to be authorized, as to: (1) Pledging all or any part of the revenues, funds or other assets of the authority, including, but not limited to, the authority loans and education loans to secure such bonds or notes; (2) pledging all or any part of the revenues paid to the authority by any guarantor or insurance company; (3) pledging any revenue-producing contract or contracts made by the authority with any individual, partnership, corporation or association or other body, public or private, or any federally guaranteed security and moneys received or receivable therefrom whether such security is acquired by the authority or a participating institution for higher education to secure the payment of the revenue bonds or notes or of any particular issue of revenue bonds or notes, subject to such agreements with bondholders or noteholders as may then exist; (4) the fees and other amounts to be charged, and the sums to be raised in each year thereby, and the use, investment and disposition of such sums; (5) the establishment and setting aside of reserves or sinking funds, the setting aside of loan funding deposits, capitalized interest accounts, and cost of issuance accounts, and the regulation and disposition thereof; (6) limitations on the use of the education loans; (7) limitations on the purpose to which the proceeds of the sale of any issue of revenue bonds or notes then or thereafter to be issued may be applied, including as authorized purposes, all costs and expenses necessary or incidental to the issuance of bonds, to the acquisition of or commitment to acquire any federally guaranteed security and pledging such proceeds to secure the payment of the revenue bonds, notes or any issue of the revenue bonds or notes; (8) limitations on the issuance of additional bonds or notes, the terms upon which additional bonds or notes may be issued and secured and the terms on which additional bonds or notes rank on a parity with, or are subordinate or superior to, other bonds or notes; (9) the refunding of outstanding bonds or notes; (10) the procedure, if any, by which the terms of any contract with bondholders or noteholders may be amended or abrogated, the amount of bonds or notes the holders of which must consent thereto, and the manner in which such consent may be given; (11) limitations on the amount of moneys derived from the educational program to be expended for operating, administrative or other expenses of the authority; (12) defining the acts or omissions to act which shall constitute a default in the duties of the authority to holders of its obligations and providing the rights and remedies of such holders in the event of default; (13) the duties, obligations and liabilities of any trustee or paying agent; (14) providing for guarantees, pledges of endowments, letters of credit, property or other security for the benefit of the holders of such bonds or notes; and (15) any other matters relating to the bonds or notes which the authority deems desirable.

(e) Subject to the approval of the State Treasurer or the Treasurer’s deputy appointed pursuant to section 3-12, required under subsection (b) of section 1-124, in connection with, or incidental to:

(1) The issuance or carrying of bonds, notes or other obligations of the authority, or the acquisition or carrying of any investment or program of investment, the authority may enter into any contract which the authority determines to be necessary or appropriate to place the obligation or investment of the authority, as represented by the bonds, notes or other obligations, investment or program of investment and the contract or contracts, in whole or in part, on the interest rate, cash flow or other basis desired by the authority, including, without limitation, contracts commonly known as interest rate swap agreements, forward payment conversion agreements, futures or contracts providing for payments based on levels of, or changes in, interest rates, stock or other indices, or contracts to exchange cash flows or a series of payments, or contracts, including, without limitation, interest rate floors or caps, options, puts or calls to hedge payment, rate, spread or similar exposure or contracts for the purchase of option rights with respect to the mandatory tender for purchase of bonds, notes or other obligations of the authority, which are subject to mandatory tender or redemption, including the issuance of certificates evidencing the right of the owner to exercise such option rights. Such contracts or agreements may also be entered into by the authority in connection with, or incidental to, entering into or maintaining any agreement which secures its bonds, notes or other obligations, subject to the terms and conditions of the agreement respecting outstanding obligations. In entering into any such contract or agreement, the authority shall give due consideration to the creditworthiness of the counter party or counter parties, including any rating by a nationally recognized rating agency, the impact on any rating on outstanding bonds or notes of the authority or any other criteria as the authority may deem appropriate, provided the unsecured long-term obligations of the counter party are rated the same or higher than the underlying rating of the authority on the applicable bonds or notes by at least one nationally recognized rating agency. For purposes of this subsection, counter party includes any party providing an unconditional guaranty of the obligations of the counter party under such contract or agreement; and

(2) The issuance or carrying of bonds, notes or other obligations or entering into any of the contracts or agreements referred to in subdivision (1) of this subsection, the authority may enter into credit enhancement or liquidity agreements, or other necessary or appropriate agreements, with payment, interest rate, security, default, remedy and other terms and conditions as the authority determines, and the authority may pledge all of any part of the collateral that secures the applicable bonds or notes, to the authority’s payment obligations under any contract or agreement entered into pursuant to this subsection. Such pledge shall be valid and binding from the time when the pledge is made; the interest so pledged by the authority shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of any such pledge shall be valid and binding against all parties having claims of any kind in tort, contract or otherwise against the authority or any participating institution of higher education, irrespective of whether such parties have notice thereof. Such lien shall have priority over all other liens, including, without limitation, the lien of any person who in the ordinary course of business furnishes services or materials to the authority. Notwithstanding the provisions of title 42a, neither the bond resolution nor any financing statement, continuation statement or other instrument by which a pledge or security interest is created or by which the authority’s interest in such collateral is assigned need be filed in any public records in order to perfect the security interest or lien thereof as against third parties. The authority’s obligations under any contract or agreement entered into pursuant to this subsection may be enforced as provided in section 10a-235.

(f) Neither the members of the board of directors of the authority nor any person executing the revenue bonds or notes shall be liable personally on the revenue bonds or notes or be subject to any personal liability or accountability by reason of the issuance thereof.

(g) The authority shall have power out of any funds available therefor to purchase its bonds or notes. The authority may hold, pledge, cancel or resell such bonds or notes subject to and in accordance with the agreements with bondholders.

(P.A. 82-313, S. 10, 28; P.A. 88-266, S. 27, 28, 46; May Sp. Sess. P.A. 04-2, S. 60, 61; P.A. 07-108, S. 3; P.A. 08-116, S. 7.)

History: P.A. 88-266 inserted references to “board of directors” in Subsecs. (c) and (e); May Sp. Sess. P.A. 04-2 amended Subsec. (b) to allow revenue bonds under section to be payable from revenues from other authority loans and education loans and other funds or assets of the authority and amended Subsec. (d) to authorize the pledging of funds, moneys receivable and other assets of the authority to secure bonds under section, effective May 12, 2004, and applicable to any pledge, lien or security interest of this state or any political subdivision of this state in existence on October 1, 2003, or created after that date; P.A. 07-108 made a technical change in Subsec. (a), added new Subsec. (e) to allow authority to enter into arrangements to manage interest rate and cash flow fluctuations in connection with issuing, carrying, or securing its bonds or notes and redesignated existing Subsecs. (e) and (f) as Subsecs. (f) and (g), effective July 1, 2007; P.A. 08-116 made a technical change in Subsec. (d)(8), effective May 27, 2008.

Sec. 10a-231. Trust agreement to secure bonds or notes. In the discretion of the authority any revenue bonds or notes issued under the provisions of this chapter may be secured by a trust agreement by and between the authority and a corporate trustee or trustees, which may be any trust company or bank having the powers of a trust company within the state. Such trust agreement or the resolution providing for the issuance of such revenue bonds or notes may pledge or assign the revenues to be received or proceeds of any contract or contracts pledged. Such trust agreement or resolution providing for the issuance of such revenue bonds or notes may contain such provisions for protecting and enforcing the rights and remedies of the bondholders or noteholders as may be reasonable and proper and not in violation of law, including particularly provisions specifically authorized by this chapter to be included in any resolution or resolutions of the authority authorizing revenue bonds or notes thereof. Any bank or trust company incorporated under the laws of the state which may act as depository of the proceeds of bonds or notes or of revenues or other moneys may furnish such indemnity bonds or pledge such securities as may be required by the authority. Any such trust agreement may set forth the rights and remedies of the bondholders or noteholders and of the trustee or trustees, and may restrict the individual right of action by bondholders or noteholders. In addition to the foregoing, any such trust agreement or resolution may contain such other provisions as the authority may deem reasonable and proper for the security of the bondholders and noteholders. All expenses incurred in carrying out the provisions of such trust agreement or resolutions may be treated as a part of the cost of the education loan program.

(P.A. 82-313, S. 11, 28.)

Sec. 10a-232. Payment of bonds or notes. Creation of special capital reserve funds. (a) Revenue bonds or notes issued under the provisions of this chapter shall not be deemed to constitute a debt or liability of the state or of any political subdivision thereof or a pledge of the full faith and credit of the state or of any such political subdivision, but shall be payable solely from the revenues and funds herein provided therefor. All such revenue bonds or notes shall contain on the face thereof a statement to the effect that: (1) The state of Connecticut shall not be obligated to pay the same or the interest thereon and (2) the authority shall not be obligated to pay the same or the interest thereon except from revenues of the education loan program or programs or the portion thereof for which they are issued, and that neither the full faith and credit nor the taxing power of the state of Connecticut or of any political subdivision thereof is pledged to the payment of the principal of or the interest on such bonds or notes.

(b) Notwithstanding the foregoing, (1) the constituent units of the state system of higher education may participate in one or more education loan programs with the authority and may incur indebtedness pursuant to authority loans, and (2) the authority may create and establish one or more reserve funds to be known as special capital reserve funds and may pay into such special capital reserve funds (A) any moneys appropriated and made available by the state for the purposes of such funds, (B) any proceeds of sale of notes or bonds, to the extent provided in the resolution of the authority authorizing the issuance thereof, and (C) any other moneys which may be made available to the authority for the purpose of such funds from any other source or sources. The moneys held in or credited to any special capital reserve fund established under this section, except as hereinafter provided, shall be used solely for the payment of the principal of bonds of the authority secured by such capital reserve fund as the same become due, the purchase of such bonds of the authority, the payment of interest on such bonds of the authority or the payment of any redemption premium required to be paid when such bonds are redeemed prior to maturity; provided, the authority shall have power to provide that moneys in any such fund shall not be withdrawn therefrom at any time in such amount as would reduce the amount of such funds to less than the maximum amount of principal and interest becoming due by reason of maturity or a required sinking fund installment in any succeeding calendar year on the bonds of the authority then outstanding and secured by such special capital reserve fund, or such lesser amount specified by the authority in its resolution authorizing the issuance of any such bonds, such amount being herein referred to as the “required minimum capital reserve”, except for the purpose of paying such principal of, redemption premium and interest on such bonds of the authority secured by such special capital reserve becoming due and for the payment of which other moneys of the authority are not available. The authority may provide that it shall not issue bonds at any time if the required minimum capital reserve on outstanding bonds secured by a special capital reserve fund and the bonds then to be issued and secured by a special capital reserve fund will exceed the amount of such special capital reserve fund at the time of issuance, unless the authority, at the time of the issuance of such bonds, shall deposit in such special capital reserve fund from the proceeds of the bonds so to be issued, or otherwise, an amount which, together with the amount then in such special capital reserve fund, will be not less than the required minimum capital reserve. The authority may, as part of the contract of the authority with the owners of such bonds, provide that on or before December first, annually, there is deemed to be appropriated from the state General Fund such sums, if any, as shall be certified by the chairman of the authority to the Secretary of the Office of Policy and Management and the Treasurer of the state, as necessary to restore each such special capital reserve fund to the amount equal to the required minimum capital reserve of such fund, and such amounts shall be allotted and paid to the authority. For the purpose of evaluation of any such special capital reserve fund, obligations acquired as an investment for any such fund shall be valued at amortized cost. Nothing contained in this section shall preclude the authority from establishing and creating other debt service reserve funds in connection with the issuance of bonds or notes of the authority. Subject to any agreement or agreements with owners of outstanding notes and bonds of the authority, any amount or amounts allotted and paid to the authority pursuant to this section shall be repaid to the state from moneys of the authority at such time as such moneys are not required for any other of its corporate purposes and in any event shall be repaid to the state on the date one year after all bonds and notes of the authority theretofore issued on the date or dates such amount or amounts are allotted and paid to the authority or thereafter issued, together with interest on such bonds and notes, with interest on any unpaid installments of interest and all costs and expenses in connection with any action or proceeding by or on behalf of the owners thereof, are fully met and discharged. Notwithstanding any other provisions contained in this chapter, the aggregate amount of bonds outstanding at any time secured by such special capital reserve funds authorized to be created and established by this section shall not exceed three hundred million dollars and no such bonds shall be issued to pay program costs unless the authority is of the opinion and determines that the revenues to be derived from the program shall be sufficient (1) to pay the principal of and interest on the bonds issued to finance the program, (2) to establish, increase and maintain any reserves deemed by the authority to be advisable to secure the payment of the principal of and interest on such bonds, (3) to pay the cost of maintaining and servicing the program and keeping it properly insured, and (4) to pay such other costs of the program as may be required.

(P.A. 82-313, S. 12, 28; P.A. 85-401; P.A. 89-274; P.A. 90-317, S. 6, 8; P.A. 91-210, S. 2, 5; P.A. 93-96, S. 2; June 5 Sp. Sess.; P.A. 97-1, S. 12, 20; P.A. 08-117, S. 2.)

History: P.A. 85-401 divided section into Subsecs. and added provision permitting the authority to establish “special capital reserve funds”; P.A. 89-274 amended Subsec. (b) to increase the maximum aggregate amount of bonds secured by special capital reserve funds from $15,500,000 to $35,000,000; P.A. 90-317 amended Subsec. (b) to allow the authority to reduce the required minimum capital reserve by a resolution authorizing the issuance of bonds; P.A. 91-210 amended Subsec. (b) to increase the level of bonds secured by the special capital reserve funds to $60,000,000; P.A. 93-96 amended Subsec. (b) to increase the maximum aggregate amount of bonds secured by special capital reserve funds to $110,000,000; June 5 Sp. Sess. P.A. 97-1 amended Subsec. (b) to increase amount that can be secured by the special capital reserve fund to $170,000,000, effective July 31, 1997; P.A. 08-117 amended Subsec. (b) to make technical changes and increase amount that can be secured by special capital reserve funds from $170,000,000 to $300,000,000, effective July 1, 2008.

Sec. 10a-233. Fees. The authority shall fix, revise, charge and collect fees and is empowered to contract with any person, partnership, association or corporation, or other body, public or private, in respect thereof. Each agreement entered into by the authority with a participating institution or institutions for higher education shall provide that the fees and other amounts payable by said institution or institutions with respect to any program or programs of the authority shall be sufficient at all times, (1) to pay its or their share of the administrative costs and expenses of such program, (2) to pay the principal of, the premium, if any, and the interest on outstanding bonds or notes of the authority issued with respect to such program to the extent that other revenues of the authority pledged for the payment of the bonds or notes are insufficient to pay the bonds or notes as they become due and payable, (3) to create and maintain reserves which may but need not be required or provided for in the bond resolution relating to such bonds or notes of the authority, and (4) to establish and maintain whatever education loan servicing, control, or audit procedures are deemed to be necessary to the operations of the authority. The authority may pledge all or any part of the revenues, funds, contracts or other assets of the authority, as described in subsections (b) and (d) of section 10a-230, as security for any issue of bonds or notes. Such pledge shall be valid and binding from the time when the pledge is made; the revenues, funds, contracts or other assets so pledged by the authority shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of any such pledge shall be valid and binding against all parties having claims of any kind in tort, contract or otherwise against the authority or any participating institution for higher education, irrespective of whether such parties have notice thereof. Such lien shall have priority over all other liens, including, without limitation, the lien of any person who in the ordinary course of business furnishes services or materials to the authority. Notwithstanding any provisions of the Uniform Commercial Code, neither the bond resolution nor any financing statement, continuation statement or other instrument by which a pledge or security interest is created or by which the authority’s interest in revenues, funds, contracts or other assets is assigned need be filed in any public records in order to perfect the security interest or lien thereof as against third parties. The use and disposition of moneys to the credit of such sinking or other similar fund shall be subject to the provisions of the resolution authorizing the issuance of such bonds or notes or of such trust agreement. Except as may otherwise be provided in such resolution, or such trust agreement, such sinking or other similar fund shall be a fund for all such revenue bonds or notes issued to finance an educational program or programs at one or more participating institutions for higher education, without distinction or priority of one over another; provided, the authority in any such resolution or trust agreement may provide that such sinking or other similar fund shall be the fund for a particular educational program or programs at a participating institution or institutions for higher education and for the revenue bonds or notes issued to finance a particular education program or programs and may, additionally, permit and provide for the issuance of revenue bonds or notes having a subordinate lien in respect of the security herein authorized to other revenue bonds or notes of the authority and, in such case, the authority may create separate or other similar funds in respect of such subordinate lien bonds or notes.

(P.A. 82-313, S. 13, 28; P.A. 01-132, S. 154; May Sp. Sess. P.A. 04-2, S. 62.)

History: P.A. 01-132 replaced reference to Sec. 42a-9-104(d) with Sec. 42a-9-109(d)(14); May Sp. Sess. P.A. 04-2 authorized the pledging of all or any part of revenues, funds, contracts or other assets of the authority to secure its bonds and made changes re priority of liens and applicability of the Uniform Commercial Code, effective May 12, 2004, and applicable to any pledge, lien or security interest of this state or any political subdivision of this state, in existence on October 1, 2003, or created after that date.

Sec. 10a-234. Use of bond proceeds and revenues. All moneys received under the provisions of this chapter, whether as proceeds from the sale of bonds or notes or as revenues, shall be deemed to be trust funds to be held and applied solely as provided in this chapter. Any officer with whom, or any bank or trust company with which, such moneys shall be deposited shall act as trustee of such moneys and shall hold and apply the same for the purposes hereof, subject to such regulations as this chapter and the resolution authorizing the bonds or notes of any issue or the trust agreement securing such bonds or notes may provide.

(P.A. 82-313, S. 14, 28.)

Sec. 10a-235. Enforcement of rights and duties. Any holder of revenue bonds, notes, bond anticipation notes, other notes or other obligations of the authority issued under the provisions of this chapter or any of the coupons appertaining thereto, and the trustee or trustees under any trust agreement, except to the extent the rights herein given may be restricted by any resolution authorizing the issuance of, or any such trust agreement securing, such bonds or other obligations, may, either at law or in equity, by suit, action, mandamus or other proceedings, protect and enforce any and all rights under the laws of the state or granted hereunder or under such resolution or trust agreement, and may enforce and compel the performance of all duties required by this chapter or by such resolution or trust agreement to be performed by the authority or any officer, employee or agent of the authority, including the appointment of a receiver to administer and operate the education loan program or programs, the revenues of which are pledged to the payment of principal of, premium, if any, and interest on such bonds or notes, with full power to pay, and to provide for payment of, principal of, premiums, if any, and interest on such bonds or notes, and with such powers, subject to the direction of the court, as are permitted by law and are accorded receivers, excluding any power to pledge additional revenues of the authority to the payment of such principal, premium and interest.

(P.A. 82-313, S. 15, 28.)

Sec. 10a-236. Tax exemption. The exercise of the powers granted by this chapter shall be in all respects for the benefit of the people of the state, for the increase of their commerce, welfare and prosperity, and for the improvement of their health and living conditions, and as operation of an educational program and assistance to students to secure a better education by the authority or its agent shall constitute the performance of an essential public function, neither the authority nor its agent shall be required to pay any taxes or assessments, including mortgage recording taxes, upon or with respect to any property acquired or used by the authority or its agent under the provisions of this chapter or upon the income therefrom. Any bonds issued under the provisions of this chapter, their transfer and income therefrom, including any profit made on the sale thereof, shall at all times be free from taxation of every kind by the state and by the municipalities and other political subdivisions in the state, but the interest on such bonds shall be included in the computation of any excise or franchise tax.

(P.A. 82-313, S. 16, 28; P.A. 95-2, S. 17, 37.)

History: P.A. 95-2 required interest on bonds to be included in the computation of excise or franchise tax, where previously interest was specifically excluded, effective March 8, 1995.

Sec. 10a-237. Refunding bonds. (a) The authority is hereby authorized to provide for the issuance of revenue bonds or notes of the authority for the purposes of refunding any revenue bonds or notes of the authority then outstanding, including the payment of any redemption premium thereon and any interest accrued or to accrue to the earliest or any subsequent date of redemption, purchase or maturity of such revenue bonds or notes, and, if deemed advisable by the authority, for the additional purpose of making additional authority loans.

(b) The proceeds of any such revenue bonds or notes issued for the purpose of refunding outstanding revenue bonds may, in the discretion of the authority, be applied to the purchase or retirement at maturity or redemption of such outstanding revenue bonds either on their earliest or any subsequent redemption date or upon the purchase or at the maturity thereof and may, pending such application, be placed in escrow to be applied to such purchase or retirement at maturity or redemption on such date as may be determined by the authority.

(c) Any such escrowed proceeds pending such use may be invested and reinvested in direct obligations of, or unconditionally guaranteed by, the United States, or in certificates of deposit or time deposits secured by direct obligations of, or unconditionally guaranteed by, the United States or in obligations of a state, territory or possession of the United States, or any political subdivision of any such state, territory or possession, or of the District of Columbia, within the meaning of Section 103(a) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, the full and timely payment of the principal of and interest on which are secured by an irrevocable deposit of direct obligations of the United States or which, if the outstanding bonds are then rated by a nationally recognized rating agency, are rated in the highest rating category by such rating agency, maturing at such time or times as shall be appropriate to assure the prompt payment, as to principal, interest and redemption premium, if any, of the outstanding revenue bonds to be so refunded. The interest, income and profits, if any, earned or realized on any such investment may also be applied to the payment of the outstanding revenue bonds to be so refunded. After the terms of the escrow have been fully satisfied and carried out, any balance of such proceeds and interest, income and profits, if any, earned or realized on the investments thereof may be returned to the authority for use by it in any lawful manner.

(d) The portion of the proceeds of any such revenue bonds or notes issued for the additional purpose of making additional authority loans may be invested and reinvested in direct obligations of, or unconditionally guaranteed by, the United States, and certificates of deposit or time deposits secured by direct obligations of, or unconditionally guaranteed by, the United States, or obligations of a state, territory or possession of the United States, or any political subdivision of any such state, territory or possession, or of the District of Columbia, within the meaning of Section 103(a) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, the full and timely payment of the principal of and interest on which are secured by an irrevocable deposit of direct obligations of the United States or which, if the outstanding bonds are then rated by a nationally recognized rating agency, are rated in the highest rating category by such rating agency, maturing not later than the time or times when such proceeds will be needed for the purpose of paying all or any part of such cost and any other investment described in section 10a-238. The interest, income and profits, if any, earned or realized on such investment may be applied to the payment of all or any part of such cost or may be used by the authority in any lawful manner.

(e) All such revenue bonds or notes shall be subject to the provisions of this chapter in the same manner and to the same extent as other revenue bonds issued pursuant to this chapter.

(P.A. 82-313, S. 17, 28; P.A. 93-96, S. 5; May Sp. Sess. P.A. 04-2, S. 63.)

History: P.A. 93-96 amended Subsecs. (c) and (d) to allow the authority to invest in certain obligations unconditionally guaranteed by a state, territory or the United States; May Sp. Sess. P.A. 04-2 amended Subsec. (d) to authorize investment of bond proceeds in investments described in Sec. 10a-238, effective May 12, 2004, and applicable to any pledge, lien or security interest of this state or any political subdivision of this state in existence on October 1, 2003, or created after that date.

Sec. 10a-238. Investment of funds. Except as otherwise provided in subsection (c) of section 10a-237, the authority may invest any funds in (1) direct obligations of the United States or the state of Connecticut, (2) obligations as to which the timely payment of principal and interest is fully guaranteed by the United States or the state of Connecticut, and Connecticut’s Short-Term Investment Fund, (3) obligations of the United States Export-Import Bank, Farmers Home Administration, Federal Financing Bank, Federal Housing Administration, General Services Administration, United States Maritime Administration, United States Department of Housing and Urban Development, Farm Credit System, Resolution Funding Corporation, federal intermediate credit banks, federal banks for cooperatives, federal land bank, federal home loan banks, Federal National Mortgage Association, Government National Mortgage Association and the Student Loan Marketing Association, (4) certificates of deposit or time deposits constituting direct obligations of any bank in the state, provided that investments may be made only in those certificates of deposit or time deposits in banks which are insured by the Federal Deposit Insurance Corporation if then in existence, (5) withdrawable capital accounts or deposits of federal chartered savings and loan associations which are insured by the Federal Savings and Loan Insurance Corporation, (6) other obligations which are legal investments for savings banks in the state, (7) investment agreements with financial institutions whose long-term obligations are rated within the top two rating categories of any nationally recognized rating service or of any rating service recognized by the Banking Commissioner or whose short-term obligations are rated within the top two rating categories of any nationally recognized rating service or of any rating service recognized by the Banking Commissioner, or investment agreements fully secured by obligations of, or guaranteed by, the United States or agencies or instrumentalities of the United States, and (8) securities or obligations which are legal investments for savings banks in Connecticut, subject to repurchase agreements in the manner in which such agreements are negotiated in sales of securities in the market place, provided the authority shall not enter into any such agreement with any securities dealer or bank acting as a securities dealer unless such dealer or bank is included in the list of primary dealers, as prepared by the Federal Reserve Bank of New York, effective at the time of the agreement. Any such securities may be purchased at the offering or market price thereof at the time of such purchase. All such securities so purchased shall mature or be redeemable on a date or dates prior to the time when, in the judgment of the authority, the funds so invested will be required for expenditure. The express judgment of the authority as to the time when any funds shall be required for expenditure or be redeemable is final and conclusive.

(P.A. 82-313, S. 18, 28; P.A. 88-266, S. 29, 46; P.A. 93-96, S. 3; P.A. 03-84, S. 11; May Sp. Sess. P.A. 04-2, S. 64.)

History: P.A. 88-266 inserted references to obligations of state in Subdivs. (1) and (2) and added Subdiv. (6) re investment “in other obligations which are legal investments for savings banks in the state”; P.A. 93-96 amended Subdiv. (2) to allow investment in Connecticut’s Short-Term Investment Fund and added Subdivs. (7) and (8); P.A. 03-84 changed “commissioner of banking” to “Banking Commissioner” in Subdiv. (7) and made a technical change, effective June 3, 2003; May Sp. Sess. P.A. 04-2 replaced “including” with “and” in Subdiv. (2), added institutions to the list of those in whose obligations the authority may invest in Subdiv. (3) and qualified the type of investment agreements with financial institutions in whose obligations the authority may invest in Subdiv. (7), effective May 12, 2004, and applicable to any pledge, lien or security interest of this state or any political subdivision of this state in existence on October 1, 2003, or created after that date.

Sec. 10a-239. Bonds declared legal investments. Bonds issued by the authority under the provisions of this chapter are hereby made securities in which all public offices and public bodies of the state and its political subdivisions, all insurance companies, trust companies, savings banks, cooperative banks, banking associations, investment companies, executors, administrators, trustees and other fiduciaries may properly and legally invest funds, including capital in their control or belonging to them. Such bonds are hereby made securities which may properly and legally be deposited with or received by any state or municipal officer or any agency or political subdivision of the state for any purpose for which the deposit of bonds or obligations of the state is now or may hereafter be authorized by law.

(P.A. 82-313, S. 19, 28.)

Sec. 10a-240. Report of authority. The authority shall keep an accurate account of all its activities and of all its receipts and expenditures and shall, annually, in the month of December, make a report thereof to its board of directors, to the Governor, to the state Auditors of Public Accounts and to the joint standing committees of the General Assembly having cognizance of matters relating to education and finance, revenue and bonding. The report shall be in a form prescribed by the members, with the written approval of said auditors. The report shall include: (1) Summaries of all applications by borrowers for education loan financing assistance presented to the authority during such fiscal year; (2) summaries of all education loan programs which have received any form of financial assistance from the authority during such year; (3) the nature and amount of all such assistance; (4) a report concerning the financial condition of the various education loan series portfolios; (5) a statement of the number of students assisted by education loans who attended Connecticut institutions for higher education and the number of such students who attended institutions for higher education outside of the state and the amount loaned for each category of students, and (6) projected activities of the authority for the next fiscal year, including projections of the total amount of financial assistance anticipated and the amount of revenue bonds or notes or other evidences of indebtedness that will be necessary to provide the projected levels of assistance during the next fiscal year. The members or said auditors may investigate the affairs of the authority, may severally examine the properties and records of the authority, and may prescribe methods of accounting and the rendering of periodical reports in relation to projects undertaken by the authority.

(P.A. 82-313, S. 20, 28; P.A. 87-295, S. 6, 8; P.A. 88-266, S. 30, 46.)

History: P.A. 87-295 substituted “December” for “January”, provided that the report be made to the joint standing committees of the general assembly having cognizance of matters relating to education and finance, revenue and bonding, in Subdiv. (1) substituted “borrowers” for “institutions for higher education”, added new Subdiv. (5) re students attending in-state and out-of-state institutions, renumbered old Subdiv. (5) as new Subdiv. (6) and made technical changes; P.A. 88-266 substituted “board of directors” for “members”.

Sec. 10a-241. Institutions of higher education authorized to take necessary action. Rate of interest. (a) Notwithstanding any other provision of law, any participating institution for higher education shall have the power to borrow money from the authority, make education loans and take all other actions and do such things as are necessary or convenient to consummate the transactions contemplated under this chapter.

(b) Notwithstanding the provisions of sections 37-4 and 37-6, it shall be lawful: (1) For the authority to establish, charge, contract for and receive any amount or rate of interest or compensation with respect to authority loans or education loans; (2) to make authority loans or education loans at a rate of interest which may, during the life of such loans, be varied or revised upon such terms or conditions as may be established by the authority; and (3) for any Connecticut institution for higher education to charge, contract for and receive any amount or rate of interest or compensation, including amounts or rates of interest which may be varied or revised upon such terms or conditions as may be established by the institution, with respect to education loans.

(P.A. 82-313, S. 21, 28; P.A. 87-295, S. 7, 8.)

History: P.A. 87-295 in Subdiv. (3) of Subsec. (b) substituted “Connecticut institution for” for “institution of”.

Sec. 10a-242. Employee benefits. The authority may take such action as it deems appropriate to enable its employees to come within the provisions and obtain the benefits of the federal Social Security Act.

(P.A. 82-313, S. 22, 28.)

Sec. 10a-243. Chapter supplemental to other laws. Power of authority not subject to supervision or regulation. The provisions of this chapter shall be deemed to provide a complete, additional and alternative method for the actions of the things authorized thereby and shall be regarded as supplemental and additional to powers granted by other laws; the issuance of revenue bonds or notes and revenue refunding bonds or notes under the provisions of this chapter need not comply with the requirements of any other law applicable to the issuance of bonds or notes. This chapter, being necessary for the welfare of the state and its inhabitants, shall be liberally construed to effect its purpose. Except as otherwise expressly provided in this chapter, none of the powers granted to the authority under the provisions of this chapter shall be subject to the supervision or regulation or require the approval or consent of any municipality or political subdivision or any department, division, commission, board, body, bureau, official or agency thereof or of the state. The authority shall not be construed to be an agency within the scope of chapter 54 or a department, institution or agency of the state.

(P.A. 82-313, S. 23, 28; P.A. 88-266, S. 31, 46.)

History: P.A. 88-266 provided that the authority shall not be construed to be a department, institution or agency of the state.

Sec. 10a-244. Chapter independent of Connecticut Student Loan Foundation. This chapter shall be independent of the authority of the Connecticut Student Loan Foundation established by chapter 187a.

(P.A. 82-313, S. 24, 28.)

Sec. 10a-245. Advisory committee. The authority shall appoint an advisory committee to consist of not more than fifteen persons who shall meet with the members of the board of directors of the authority and with staff at least once each calendar year in accordance with guidelines established by the authority. The members of the advisory council may include representatives of the various interests served by the authority such as students, faculty and administrators of both public and private secondary schools, state and local education officials, parents, bankers, insurance companies and investment bankers and other citizens interested in the financing of higher education in the state.

(P.A. 82-313, S. 25, 28; P.A. 88-266, S. 32, 46.)

History: P.A. 88-266 inserted reference to board of directors.

Sec. 10a-246. Obligations of borrower. The obligations of a borrower with respect to an education loan under the provisions of this chapter shall not be subject to a discharge in bankruptcy except as provided in the Bankruptcy Code.

(P.A. 82-313, S. 26, 28.)

Secs. 10a-247 to 10a-249. Reserved for future use.