The Vermont Statutes Online
The Vermont Statutes Online have been updated to include the actions of the 2023 session of the General Assembly.
NOTE: The Vermont Statutes Online is an unofficial copy of the Vermont Statutes Annotated that is provided as a convenience.
Subchapter 005 : Education Loan Program(Cite as: 16 V.S.A. § 2868)
§ 2868. Notes, bonds, and other obligations
(a) Power to issue obligations. The Corporation may issue its negotiable notes, bonds, and other obligations in such principal amount as the Corporation determines necessary to provide sufficient funds for the availability of loans for educational purposes. The notes, bonds, and other obligations may be issued in taxable form or nontaxable form, or both. The taxability of one series shall not affect the taxability of any other series, nor shall the issuance of taxable obligations be deemed a waiver of the right of this State or the Corporation to issue nontaxable obligations.
(b) Repayment. The Corporation may make payment of the principal of and interest on its notes, bonds, and other obligations and may determine the funding, refunding, or renewal of the reserves and sinking funds to secure the notes, bonds, and other obligations, and all other expenditures of the Corporation incident to and necessary or convenient to carry out such corporate purpose, including costs of issuance of such debt. The Corporation may contract with any person, including the State of Vermont or the United States, or any of their agencies or instrumentalities, to guarantee all or a part of the principal of or interest on the Corporation’s obligations or on the education loans made, purchased, guaranteed, or serviced by the Corporation.
(c) Power to determine nature of debt obligations. In furtherance of its corporate purposes, with respect to the issuance of its notes, bonds, and other debt obligations, the Corporation may by resolution provide:
(1) for the pledging or granting of a security interest in all or a portion of its property and revenues, including the granting of security interests of differing priorities in education loans and the revenues associated therewith, subject to such agreements as may then exist with holders of the Corporation’s notes, bonds, or other obligations;
(2) the terms upon which payments are to be made upon such notes, bonds, and other obligations by the Corporation;
(3) the form of such notes, bonds, and other obligations, which may include “book entry” if the Corporation so determines;
(4) the conditions upon which such notes, bonds, and other obligations may be transferred; and
(5) for limitations on the Corporation’s issuance of additional notes, bonds, or other debt obligations, and on the expenditure of revenues related to them; and upon the refunding of its outstanding or other notes, bonds, or other obligations.
(d) Nonenumerated powers. The Corporation has the power to exercise all or part of a combination of the powers granted in this chapter; to make covenants other than and in addition to, but not inconsistent with, the covenants expressly authorized in this section; to make such covenants and to do any and all acts and things as may be necessary or prudent to adequately secure its notes, bonds, or other obligations or as will tend to make its notes, bonds, and other obligations more marketable notwithstanding that such covenants, acts, or things are not enumerated in this section.
(e) Pledges. Any pledge made by the Corporation shall be valid and binding from the time when the pledge is made; the revenues, monies, or property so pledged and thereafter received by the Corporation shall immediately be subject to the lien of the pledge without any physical delivery of it or further act. That pledge shall be valid and binding as against all parties having claims of any kind in tort, contract, or otherwise against the Corporation, irrespective of whether those parties have notice of it.
(f) Indemnification. Neither the members of the Board nor executive officers of the Corporation nor any other person executing the Corporation’s notes, bonds, or other obligations shall be subject to any personal liability or accountability by reason of the issuance of such notes, bonds, or other obligations.
(g) Fully negotiable instruments. Notwithstanding any provision of law to the contrary, a bond, note, or other obligation issued under this chapter is fully negotiable for all purposes of 9A V.S.A. § 1-101 et seq., and each holder or owner of such, or of any coupon appurtenant to them, by accepting the bond or note or other obligation or coupon shall be conclusively deemed to have agreed that such instrument is fully negotiable for those purposes, and all bonds, notes, or other obligations and interest coupons appertaining to them issued by the Corporation shall have and are hereby declared to have all the qualities and incidents of investment securities under 9A V.S.A. § 1-101 et seq., but no provision of those sections respecting the filing of a financing statement to perfect a security interest shall be applicable to any pledge made or security interest created in connection with the issuance of the bonds, notes, other obligations, or coupons.
(h) No impairment by the State. The State does hereby pledge to and agree with the holders of the notes, bonds, and other obligations issued under this chapter that the State will not limit or restrict the rights hereby vested in the Corporation to perform its obligations and to fulfill the terms of any agreement made with the holders of its bonds or notes or other obligations. Neither will the State in any way impair the rights and remedies of the holders until the notes and bonds and other obligations, together with interest on them, and interest on any unpaid installments of interest, are fully met, paid, and discharged. The Corporation is authorized to execute this pledge and agreement of the State in any agreement with the holders of the notes or bonds or other obligations.
(i) No liability of the State. Notes, bonds, or other obligations issued under the provisions of this chapter shall not be deemed to constitute a debt or liability or obligation of the State of Vermont or of any political subdivision of it, nor shall it be deemed to constitute a pledge of the faith and credit of the State or of any political subdivision, but shall be payable solely from the revenues or assets of the Corporation pledged to support them. Each obligation issued by the Corporation shall contain on its face a statement to the effect that the Corporation shall not be obligated to pay the same nor the interest on it except from the revenues or assets pledged for those purposes and that neither the faith and credit nor the taxing power of the State of Vermont or of any political subdivision of it is pledged to the payment of the principal of or the interest on these obligations.
(j) Legal investment. Notwithstanding any provision of law to the contrary, the State and all public officers, governmental units, and agencies of the State; all banks, trust companies, savings banks and institutions, building and loan associations, savings and loan associations, investment companies, and other persons carrying on a banking business; all insurance companies, insurance associations, and other persons carrying on an insurance business; all credit unions; and all executors, administrators, guardians, trustees, and other fiduciaries may legally invest any sinking funds, monies, or other funds belonging to them or within their control in any bonds or notes or other obligations issued under this chapter, and the bonds or notes or other obligations are authorized security for any and all public deposits.
(k) Role of the Corporation. The Corporation is designated as the guarantor, servicer, and secondary loan market for all educational loans in this State.
(l) 8 V.S.A. Chapter 73 inapplicable. Notwithstanding any general or special law to the contrary, the provisions of 8 V.S.A. chapter 73 (licensed lenders, mortgage brokers, mortgage loan originators, sales finance companies, and loan solicitation companies) shall not apply to the Corporation or to any loan made, purchased, or guaranteed pursuant to this chapter.
(m) Interest rate exchange agreements. The Corporation may enter into one or more agreements for the exchange of interest rates, cash flows, or payments, to reduce net borrowing costs, achieve desirable net effective interest rates in connection with its issuance and sale of debt obligations, and to provide for an efficient means of debt management. (Added 1981, No. 174 (Adj. Sess.), § 5, eff. April 20, 1982; amended 1985, No. 24, § 1, eff. April 26, 1985; 1989, No. 29, § 1 eff. April 26, 1989; 1993, No. 147 (Adj. Sess.), § 7; 2019, No. 131 (Adj. Sess.), § 104; 2021, No. 20, § 64.)