136A.16 POWERS AND DUTIES OF OFFICE.
Subdivision 1. Designation.
Notwithstanding chapter 16C, the Minnesota Office of Higher
Education is designated as the administrative agency for carrying out the purposes and terms of
. The office may establish one or more loan programs.
Subd. 2. Rules.
The office shall adopt policies and prescribe appropriate rules to carry out
the purposes of sections
. The policies and rules except as they relate to
loans under section
must be compatible with the provisions of the National Vocational
Student Loan Insurance Act of 1965 and the provisions of title IV of the Higher Education Act of
1965, and any amendments thereof.
Subd. 3. Loan amounts.
The office may make loans in amounts not to exceed the maximum
amount provided in the Higher Education Act of 1965 and any amendments thereof except
that the limitation shall not apply to loans under section
. The office may establish
procedures determining the loan amounts for which students are eligible.
Subd. 4. Lenders.
The office may contract with or enter into agreements with eligible
lenders for the purpose of making loans to eligible students in accordance with the policies
and rules of the office.
Subd. 5. Agencies.
The office may contract with guarantee agencies, insurance agencies,
collection agencies, or any other person, to carry out the purposes of sections
Subd. 6. Insurance.
The office shall be empowered to charge for insurance on each loan a
premium, payable each year in advance. The premiums shall not be in an amount in excess of
the premium in the federal regulations which govern the vocational and higher education loan
program except that the limitation shall not apply to loans under section
fees shall be available to the office without fiscal year limitation for the purposes of making loans
and meeting expenses of administering the loan programs.
Subd. 7. Funds.
The office may apply for, receive, accept, and disburse federal funds, as
well as funds from other public and private sources, made available to the state for loans or as
administrative moneys to operate student loan programs. In making application for funds, it may
comply with all requirements of state and federal law and rules and regulations, and enter into the
contracts necessary to enable it to receive, accept, and administer such funds.
Subd. 8. Investment.
Money made available to the office that is not immediately needed
for the purposes of sections
may be invested by the office. The money
must be invested in bonds, certificates of indebtedness, and other fixed income securities, except
preferred stocks, which are legal investments for the permanent school fund. The money may
also be invested in prime quality commercial paper that is eligible for investment in the state
employees retirement fund. All interest and profits from such investments inure to the benefit of
the office or may be pledged for security of bonds issued by the office or its predecessors.
Subd. 9. Staff.
The office may employ the professional and clerical staff the director deems
necessary for the proper administration of the loan programs established and defined by sections
Subd. 10. Director.
Subject to its directives and review, the office may delegate to the
director the responsibility for issuance of public information concerning provisions of sections
, for design of loan application forms, and for prescribing procedures for
submission of applications for loans.
Subd. 11.[Repealed, 1995 c 212 art 2 s 22
Subd. 12. Records.
The office shall establish and maintain appropriate accounting and
Subd. 13. Subject to suit.
The office may sue and be sued.
Subd. 14. Notes.
The office may sell at public or private sale, at the price or prices determined
by the office, any note or other instrument or obligation evidencing or securing a loan made by the
office or its predecessor, the Minnesota Higher Education Coordinating Board.
Subd. 15. Letters of credit; surety.
The office may obtain municipal bond insurance, letters
of credit, surety obligations, or similar agreements from financial institutions.
Subd. 16. Interest rate swaps and other agreements.
(a) The office may enter into
interest rate exchange or swap agreements, hedges, forward purchase or sale agreements, or
other comparable interest rate protection agreements with a third party in connection with the
issuance or proposed issuance of bonds, outstanding bonds or notes, or existing comparable
interest rate protection agreements.
(b) The agreements authorized by this subdivision include without limitation master
agreements, options, or contracts to enter into those agreements in the future and related
agreements, including, without limitation, agreements to provide credit enhancement, liquidity,
(c) The agreements authorized by this subdivision may be entered into on the basis of
negotiation with a qualified third party or through a competitive proposal process on terms and
conditions as and with covenants and provisions approved by the office and may include, without
(1) provisions establishing reserves;
(2) pledging assets or revenues of the office for current or other payments or termination
(3) contracting with the other parties to the agreements to provide for the custody, collection,
securement, investment, and payment of money of the office or money held in trust; or
(4) requiring the issuance of bonds or other agreements authorized by this section in the
(d) With respect to bonds or notes outstanding or proposed to be issued bearing interest at a
variable rate, the office may agree to pay sums equal to interest at a fixed rate or at a different
variable rate determined in accordance with a formula set out in the agreement on an amount not
exceeding the outstanding principal amount of the bonds or notes at the time of payment in
exchange for an agreement by the third party to pay sums equal to interest on a like amount at a
variable rate determined according to a formula set out in the agreement.
(e) With respect to bonds or notes outstanding or proposed to be issued bearing interest at a
fixed rate or rates, the office may agree to pay sums equal to interest at a variable rate determined
in accordance with a formula set out in the agreement on an amount not exceeding the outstanding
principal amount of the bonds or notes at the time of payment in exchange for an agreement by
the third party to pay sums equal to interest on a like amount at a fixed rate or rates determined
according to a formula set in the agreement.
(f) Subject to any applicable covenants of the office, payments required to be made by the
office under the agreement, including termination payments, may be made from amounts pledged
or available to pay debt service on the bonds or notes with respect to which the agreement was
made or from assets of the loan capital fund of the office. The office may issue bonds or notes to
provide for any payments, including, without limitation, a termination payment due or to become
due under an agreement authorized under this section.
(g) The authority of the office to enter into interest rate protection agreements under this
section is limited to agreements related to bonds and notes with an aggregate value of no more
History: 1967 c 615 s 1; 1967 c 894 s 3; 1969 c 6 s 23; 1973 c 605 s 5,6; 1975 c 271 s 6;
1977 c 384 s 4-7; 1981 c 300 s 3-5; 1983 c 258 s 47; 1985 c 248 s 70; 1989 c 293 s 36-41;
1995 c 212 art 3 s 34,59; 1997 c 183 art 3 s 12-15; 1998 c 386 art 2 s 43; 2005 c 107 art 2 s
60; 2007 c 144 art 2 s 27,28