WHEREAS, it is desirable to encourage, foster and facilitate the industrial and economic development of the State by promoting the education at institutions of higher learning of residents of this State; and to this end to create a political subdivision of the State to be known as the State Education Assistance Authority and to define its powers and duties; to grant powers to the Authority to further the objectives of the Act; to provide that no debt of the State or of any political subdivision other than the Authority created by this Act shall be incurred by the acts and undertakings of the Authority; to authorize all agencies, officers and employees of the State and of its political subdivisions to cooperate with and contribute property to the Authority; to appropriate funds to the Authority; and to provide for matters in connection with the foregoing: Now, therefore,


The General Assembly of North Carolina do enact:


Section 1.  Chapter 116 of the General Statutes is hereby amended by adding a new Article at the end thereof, to be designated as Article 23, and to read as follows:


"State Education Assistance Authority

"116-201.  Definitions. As used in this Act, the following words and terms shall have the following meanings, unless the context shall indicate another or different meaning or intent:

"(a)       The word 'Authority' shall mean the State Education Assistance Authority created by this Act, or if the Authority shall be abolished, the board, body, commission or agency succeeding to the principal functions thereof or on whom the powers given by this Act to the Authority shall be conferred by law.

"(b)      The word 'obligations' shall mean those evidences of debt which the Authority may buy, sell, endorse or guarantee under the provisions of this Act.

"(c)       The words 'act' or 'undertaking' shall mean the official act of the Authority in connection with the acquisition or disposition of all or any part of obligations or interest therein which the Authority is authorized to buy or sell under G.S. 116-202 of this Act.

"116-202.  In order to facilitate the college education of residents of this State and promote the industrial and economic development of the State, the State Education Assistance Authority (hereinafter created) is hereby authorized and empowered to buy and sell obligations of students at institutions of higher education representing loans made to such students for the purpose of obtaining an education.

"No act or undertaking of the Authority shall be deemed to constitute a debt of the State or of any political subdivision thereof or a pledge of the faith and credit of the State or of any such political subdivision, but shall be payable solely from the funds of the Authority. All such acts and undertakings shall contain on the face thereof a statement to the effect that neither the State nor the Authority shall be obligated to pay the same or the interest thereon except from revenues of the Authority and that neither the faith and credit nor the taxing power of the State or of any political subdivision thereof is pledged to the payment of the principal of or the interest on such acts and undertakings.

"All expenses incurred in carrying out the provisions of this Act shall be payable solely from funds provided under the provisions of this Act and no liability or obligation shall be incurred by the Authority hereunder beyond the extent to which moneys shall have been provided under the provisions of this Act.

"116-203.  There is hereby created and constituted a political subdivision of the State to be known as the 'State Education Assistance Authority'. The exercise by the Authority of the powers conferred by this Act shall be deemed and held to be the performance of an essential governmental function.

"The Authority shall be governed by a board of directors consisting of seven members, each of whom shall be appointed by the Governor. Two of the first members of the board appointed by the Governor shall be appointed for terms of one year, two for terms of two years, two for terms of three years, and one for a term of four years from the date of their appointment; and thereafter the members of the board shall be appointed for terms of four years. Vacancies in the membership of the board shall be filled by appointment of the Governor for the unexpired portion of the term. Members of the board shall be subject to removal from office in like manner as are State, county, town and district officers. Immediately after such appointment, the directors shall enter upon the performance of their duties. The board shall annually elect one of its members as chairman and another as vice chairman, and shall also elect annually a secretary, or a secretary-treasurer, who may or may not be a member of the board. The chairman, or in his absence, the vice chairman, shall preside at all meetings of the board. In the absence of both the chairman and vice chairman, the board shall appoint a chairman pro tempore, who shall preside at such meetings. Four directors shall constitute a quorum for the transaction of the business of the Authority, and no vacancy in the membership of the board shall impair the right of a quorum to exercise all the rights and perform all the duties of the Authority. The members of the board shall be entitled to reimbursement for their expenses incurred in attendance upon the meetings of the board or while otherwise engaged in the discharge of their duties. Each member of the board shall also be paid the sum of twenty-five dollars ($25.00) per day for each day or portion thereof during which he is engaged in the performance of his duties. Such expenses and compensation shall be paid out of the treasury of the Authority upon vouchers signed by the chairman of the board or by such other person or persons as may be designated by the board for the purpose.

"116-204.  The Authority is hereby authorized and empowered:

(a)        To fix and revise from time to time and charge and collect fees for its acts and undertakings;

(b)        To establish rules and regulations concerning its acts and undertakings;

(c)        To acquire, hold and dispose of personal property in the exercise of its powers and the performance of its duties;

(d)        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 Act;

(e)        To employ, in its discretion, consultants, attorneys, accountants, and financial experts, superintendents, managers and such other employees and agents as may be necessary in its judgment, and to fix their compensation to be payable from funds made available to the Authority by law;

(f)         To receive and accept from any federal or private agency, corporation, association or person grants to be expended in accomplishing the objectives of the Authority, and to receive and accept from the State, from any municipality, county or other political subdivision thereof and from any other source aid or contributions of either money, property, or other things of value, to be held, used and applied only for the purposes for which such grants and contributions may be made;

(g)        To sue and to be sued; to have a seal and to alter the same at its pleasure; and to make and from time to time amend and repeal bylaws, rules and regulations not inconsistent with law to carry into effect the powers and purposes of the Authority;

(h)        To do all other acts and things necessary or convenient to carry out the powers expressly granted in this Act; provided, however, that nothing in this Act shall be construed to empower the Authority to engage in the business of banking or insurance.

"116-205.  (a) Title to any property acquired by the Authority shall be taken in the name of the Authority.

(b)        The State hereby consents, subject to the approval of the Governor and Council of State, to the use of any other lands or property owned by the State, which are deemed by the Authority to be necessary for its purposes.

(c)        The Authority may establish such offices in State-owned or rented structures as it deems appropriate for its purposes.

"116-206.  With the funds available to the Authority, for purposes other than the payment of personnel and the lease or rental of offices or equipment, the Authority may acquire from any bank or other lending institution of this State a contingent interest not exceeding eighty per cent (80%) of any individual obligation; the total contingent interest of the Authority on all such obligations shall not exceed at any one time a sum equal to twelve and one-half times the total funds which the Authority can employ to acquire such contingent interests. When the Authority acquires any such contingent interest, it may require the payment to it of a portion of the interest payable upon any such obligation. In each such acquisition, the Authority shall provide that at such time as the obligation becomes delinquent, the bank or other lending institution shall notify the Authority forthwith, and shall transfer forthwith to the Authority, by assignment or otherwise, an interest in such obligation equal to the contingent interest of the Authority therein. The bank or other lending institution and the Authority shall forthwith take such steps as may be necessary to recover the balance due upon any such obligation; any such recovery shall be apportioned between the Authority and the bank or other lending institution as their respective interests may appear.

"116-207.  The Authority shall prescribe the terms, conditions and limitations upon which it will acquire a contingent or direct interest in any obligation and such terms, conditions and limitations shall include, but without limiting the generality hereof, the interest rate payable upon such obligations, the maturities thereof, the terms for payment of principal and interest, applicable life or other insurance which may be required in connection with any such obligation and who shall pay the premiums thereon, the safekeeping of assets pledged to secure any such undertaking, and any and all matters in connection with the foregoing as will protect the assets of the Authority.

"116-208.  The provisions of this Act shall be liberally construed to the end that its beneficial purposes may be effectuated.

"116-209.  The appropriation made to the Authority under this Act shall be used exclusively for the purpose of acquiring contingent or vested rights in obligations which it may acquire under this Act; such appropriations, payments, revenue and interest as well as other income received in connection with such obligations is hereby established as a trust fund. Such fund shall be used for the purposes of the Authority other than maintenance and operation.

"The maintenance and operating expenses of the Authority shall be paid from funds specifically appropriated for such purposes. No part of the trust fund established under this Section shall be expended for such purposes.

"The Authority shall be the trustee of the trust fund hereby created and shall have full power to invest and reinvest such funds, subject to the limitation that no investment shall be made, except upon the exercise of bona fide discretion, in securities which, at the time of making the investment, are, by statute, permitted for the investment of reserves of domestic life insurance companies. Subject to such limitation, the Authority shall have full power to hold, purchase, sell, assign, transfer or dispose of, any of the securities or investments in which any of the funds created herein have been invested, as well as of the proceeds of such investments and any moneys belonging to such funds.

"In lieu of exercising all of the powers hereunder with respect to the investment and reinvestment of the several funds, the Authority may delegate such powers to the State Treasurer, in which event the State Treasurer shall exercise the investment powers as prescribed herein.

"The State Treasurer shall be the custodian of the assets of the Authority. All payments from the accounts thereof shall be made by him issued upon vouchers signed by such persons as are designated by the Authority. A duly attested copy of a resolution of the Authority designating such persons and bearing on its face the specimen signatures of such persons shall be filed with the State Treasurer as his authority for issuing warrants upon such vouchers.

"116-210.  Each and every application and provision of this Act is severable and if any provision or application hereof is held invalid by a court from which no appeal may be taken, the remaining provisions and applications of this Act shall remain in full force and effect."

Sec. 2.  There may be appropriated to the State Education Assistance Authority from the Contingency and Emergency Fund the sum of fifty thousand dollars ($50,000.00). When appropriated the State Treasurer shall transfer such sums upon his books to the credit of the State Education Assistance Authority to be available exclusively for the acquisition of contingent or direct interests in obligations which the Authority may acquire under this Act.

Sec. 3.  All laws and clauses of laws in conflict with this Act are hereby repealed.

Sec. 4.  This Act shall be in full force and effect from and after its ratification.

In the General Assembly read three times and ratified, this the 17th day of June, 1965.