Education: Power to Make Loans to Parents of Students

Subject:

Requested By: Stan C. Broadway Executive Director

N.C. State Education Assistance Authority

Question: Does the North Carolina State Education Assistance Authority have the power to make loans to parents of students for the purpose of paying the costs of their children’s education beyond the high school level?

Conclusion: Yes.

The North Carolina State Education Assistance Authority (Authority) was established by the General Assembly, in large part, to function as a conduit to dispense federal student loan funds to residents of the State. See, e.g., N.C.G.S. 116-201, 209.3 and 209.16. See also, Education Assistance Authority v. Bank of Statesville, 276 N.C. 576, 591, 174 S.E. 2d 551 (1970). Until very recently, Congress only made funds available to make loans directly to students. On October 3, 1980, however, President Carter signed into law the Education Amendments Act of 1980 (Act) which, among other things, amends Part B of Title IV of the Higher Education Act of 1965, 20

U.S.C. 1071, et seq., to authorize a program of loans to parents of dependent undergraduate students for the purpose of assisting these parents in the payment of the costs of post-secondary education for their children. Specifically, the Act, at Section 419, provides, inter alia:

"Parents of a dependent undergraduate student . . . shall be eligible to borrow funds under this part. . . . Whenever necessaary to carry out the provisions of this section the terms "students’ and "student borrower" used in this part shall include a parent borrower under this section."

The Board of Directors of the Authority, in view of this amendment, is faced with the decision of whether to participate in this loan program for parents of students. There is some doubt in the minds of the members of the Board if the General Statutes confer power upon the Authority to make loans to the parents of students. The opinion of this Office has been requested.

The powers of the Authority are set forth in Article 23 of Chapter 116 of the General Statutes. Throughout that Article reference is made to "students" and "student loans". Nowhere is any direct reference made to loans to parents of students to assist them in paying the costs of the education of their children. This absence tends to indicate that the Authority does not have the power to make loans to parents for this purpose. An examination of the purposes for which the authority was established and other provisions of Article 23, however, convinces us to the contrary.

The guiding principle in statutory construction is legislative intent and it is the intent which controls the interpretation of a statute. Indeed, the Supreme Court has said: "The intention of the Legislature constitutes the law." State v. Hart, 287 N.C. 76, 80, 213 S.E. 2d 291 (1975). Here, we need not speculate as to legislative intent for the General Assembly has specifically spelled out its purpose and intention in enacting Article 23.

"The purpose of this Article is to authorize a system of financial assistance, consisting of grants, loans, workstudy or other employment, and other aids, for qualified residents of the State to enable them to obtain an education beyond the high school level by attending public or private educational institutions. The General Assembly has found and hereby declares that it is in the public interest and essential to the welfare and well-being of the inhabitants of the State and to the proper growth and development of the State to foster and provide financial assistance to residents of the State, properly qualified therefor, in order to help them to obtain an education beyond the high school level. The General Assembly has further found that many residents of the State who are fully qualified to enroll in appropriate educational institutions for furthering their education beyond the high school level lack the financial means and are unable, without financial assistance as authorized under this Article, to pay the cost of such education, with a consequent irreparable loss to the State of valuable talents vital to its welfare. The General Assembly has determined that the establishment of a proper system of financial assistance for such objective purpose serves a public purpose and is fully consistent with the long established policy of the State to encourage, promote and assist the education of the people of the State." N.C.G.S. 116-201(a).

Nor are we required to determine whether the provisions of Article 23 are to be strictly or liberally construed for, again, the General Assembly has provided us with express directions. "The provisions of this Article shall be liberally construed to the end that its beneficial purposes may be effectuated." N.C.G.S. 116-208. There is nothing in the enumerated purposes of the General Assembly which requires that loans only be made directly to students. Rather, the basic legislative purpose is "to enable (students) to obtain an education beyond the high school level."

N.C.G.S. 116-201(a). One reasonable means of accomplishing this end is to make loans to parents for the purpose of paying the costs of their children’s education.

Two provisions of Article 23 deal directly with the power of the Authority to make loans.

N.C.G.S. 116-209.3 seems to only authorize the Authority to make loans directly to students. It provides, inter alia:

"The Authority is authorized to develop and administer programs and perform all functions necessary or convenient . . . for qualifying for loans, grants, insurance and other benefits and assistance under any program of the United States now or hereafter authorized fostering student loans." (Emphasis added)

The power of the Authority under N.C.G.S. 116-209.16, however, is not so limited. This statute provides, inter alia: "The Authority, in addition to all the powers more specifically vested hereunder, shall have all the other powers necessary or convenient to carry out and effectuate the purposes and provisions of this Article, including the power to receive, administer and comply with the conditions and requirements respecting any . . . grant . . . of any . . . money . . . or any other assistance from any federal . . . agency. . . ."

In exercising this power the Authority is required to comply with certain criteria and requirements. These criteria and requirements are:

"(1) Any student loan grant or other assistance provided by the Authority to any student shall be necessary to enable the student to pursue his education above the high school level; and

(2) No student loan grant or other financial assistance shall be provided to any student by the Authority except in conformity with the provisions of this Article and to carry out the purposes hereof."

N.C.G.S. 116-209.16.

Given the broad purposes of Article 23 and the General Assembly’s direction that its provision be liberally construed, we are of the opinion that the "other assistance" and "other financial assistance" to students referenced in N.C.G.S. 116-209.16 reasonably includes loans by the Authority to the parents of students, so long as such loans are used by parents for paying the cost of their children’s education beyond the high school level and so long as such loans are "necessary" to enable the student to obtain that education. Accordingly, we conclude that the Authority has the power under Article 23 to participate in the program of loans to parents of students authorized by the 1980 Amendments to Part B of Title IV of the Higher Education Act of 1965.

Rufus L. Edmisten Attorney General

Edwin M. Speas, Jr. Special Deputy Attorney General