The corporation must report defaulting loan borrowers to the comptroller, and the comptroller generally may not pay them by warrant or electronic transfer unless a listed exception applies.
Sec. 57.48. PAYMENTS BY THE COMPTROLLER TO DEFAULTING PERSONS PROHIBITED. (a) Except as provided by Subsection (g), the corporation shall report to the comptroller the name of any person who is in default on a loan guaranteed under this chapter. The report must contain the information and be submitted in the manner and with the frequency required by rules of the comptroller. (b) Except as provided by this section, the comptroller, as a ministerial duty, may not issue a warrant or initiate an electronic funds transfer to a person who has been reported properly under Subsection (a). (c) Except as provided by this section, the comptroller may not issue a warrant or initiate an electronic funds transfer to the assignee of a person who has been reported properly under Subsection (a) if the assignment became effective after the person defaulted. (d) If this section prohibits the comptroller from issuing a warrant or initiating an electronic funds transfer to a person, the comptroller may issue a warrant or initiate an electronic funds transfer only as provided by this section to: (1) the person's estate; (2) the distributees of the person's estate; or (3) the person's surviving spouse. (e) This section does not prohibit the comptroller from issuing a warrant or initiating an electronic funds transfer to a person reported properly under Subsection (a) or to the assignee of the person if the corporation subsequently and properly reports to the comptroller that: (1) the person is complying with an installment payment agreement or similar agreement to eliminate the default, unless the corporation subsequently and properly reports to the comptroller that the person no longer is complying with the agreement; (2) the default is being eliminated by deductions of money from the person's compensation under the garnishment provisions of 20 U.S.C. Section 1095a, unless the corporation subsequently and properly reports to the comptroller that the default is no longer being eliminated by the deductions; (3) the default has been eliminated; or (4) the report of default was prohibited by Subsection (g) or was otherwise erroneous. (f) This section does not prohibit the comptroller from issuing a warrant or initiating an electronic funds transfer to pay: (1) the compensation of a state officer or employee; or (2) the remuneration of an individual if the remuneration is being paid by a private person through a state agency. (g) The corporation may not report a person under Subsection (a) unless the corporation first provides the person with an opportunity to exercise any due process or other constitutional or statutory protection that must be accommodated before the corporation may begin a collection action or procedure. The comptroller may not investigate or determine whether the corporation has complied with this prohibition. (h) This section does not prohibit the comptroller from issuing a warrant or initiating an electronic funds transfer if: (1) the warrant or transfer would result in a payment being made in whole or in part with money paid to the state by the United States; and (2) the state agency that administers the money certifies to the comptroller that federal law: (A) requires the payment to be made; or (B) conditions the state's receipt of the money on the payment being made. (i) This section does not prohibit the comptroller from issuing a warrant or initiating an electronic funds transfer to a person reported properly under Subsection (a) or to the person's assignee, the person's estate, the distributees of the person's estate, or the person's surviving spouse if the corporation consents to issuance of the warrant or initiation of the transfer. (j) The comptroller may adopt rules and establish procedures to administer this section. (k) In this section: (1) "Compensation" means base salary or wages, longevity pay, hazardous duty pay, benefit replacement pay, or an emolument provided in lieu of base salary or wages. (2) "State agency" means a board, commission, council, committee, department, office, agency, or other governmental entity in the executive, legislative, or judicial branch of state government. The term includes an institution of higher education as defined by Section 61.003, other than a public junior or community college. (3) "State officer or employee" means an officer or employee of a state agency. Added by Acts 1979, 66th Leg., p. 1711, ch. 706, Sec. 1, eff. Aug. 27, 1979. Amended by Acts 1991, 72nd Leg., ch. 641, Sec. 1, eff. Sept. 1, 1991; Acts 1993, 73rd Leg., ch. 449, Sec. 20, eff. Sept. 1, 1993; Acts 1997, 75th Leg., ch. 1035, Sec. 21, 22, eff. June 19, 1997; Acts 1999, 76th Leg., ch. 1467, Sec. 1.01, eff. Jan. 1, 2000; Acts 2001, 77th Leg., ch. 1158, Sec. 5, eff. June 15, 2001.