Yoii have requested our-opinion regerdii the authority of University of Texas component institutions to assign to the United States the rights under loans deemed .uncollectible under the National Defense Direct Student Loen Prc%ram. @ 20 USC SlO87aa et seq.; 45 CPR SSl44.l-l44.64. You state that the Department of Health, Education dc Welfare encouqes such assignment by exemptii these loans from the computation of the institution’s~ loan default rate. A low default rate is e prerequisite for continued participation in the program. Prior to en assignment, evidence must appear .in the -borrower’s file that, the institution has exercised due diligence in attempting to collect the loan. You ask whether this assignment of uncollectible loans contravenes article 3, section 51 of the Texas Constitution, which prohibits the making of any grant of public money “to any individual, association of individuals, municipal or other corporation whatsoever?

Siice continued participation requires that en institution comply v&h federal default standards, and since assignment of uncollectible loans is a principal means of compliance, we believe it is clear that, in making the assignment, the state ‘receives a substantial benefit.

Control District v. Mann, 140 S.W.2d 1098 (Tex. 1940); and Attorney General Opinion H-1033 U977). We ,eonclude therefore that e public indtution .pf higher education is not prohibited from assisning to the United States student loans deemed uncollectible.

p. 77

Honorable E. D. Welker - Page Two WW-25)

: : SiiMMARY ,’ A public institution of higher e&cation is not prohibited from assigning to the United States student loans deemed uncollectible.

MARK WHITE Attornev General of Texas JOHN W. FAINTER, JR.

First Assistant Attorney General