(a) The purpose of the authority shall be to assist borrowers and Connecticut institutions for higher education in the financing and refinancing of the costs of education and for this purpose the authority is authorized and empowered:

(1) To adopt bylaws for the regulation of its affairs and the conduct of its business.

(2) To adopt an official seal and alter the same at pleasure.

(3) To maintain an office at such place or places in the state as it may designate.

(4) To sue and be sued in its own name, plead and be impleaded.

(5) To establish criteria and guidelines for education assistance programs. Such criteria and guidelines shall include such eligibility standards for students and borrowers as the authority shall determine are necessary or desirable in order to effectuate the purposes of this chapter, including the following: (A) Each student and borrower shall satisfy such financial qualifications as the authority shall establish to effectuate the purposes of this chapter, and (B) each student and borrower shall submit to the student’s institution for higher education or to the authority, as the authority may determine, such information as may be required by the authority.

(6) To establish specific criteria governing (A) the eligibility of Connecticut institutions for higher education to participate in its programs, (B) the making of authority loans, education grants and education loans, (C) provisions for default, (D) the establishment of default reserve funds, (E) the purchase of default insurance, (F) the provision by such institutions of prudent debt service reserves, (G) the furnishing by Connecticut institutions for higher education and others of such additional guarantees of the education loans, authority loans or the bonds as the authority shall determine, and (H) any procedures for allocating authority loans and education grants among Connecticut institutions for higher education eligible for the programs of the authority in order to effectuate the purpose of this chapter. All such criteria shall be established to assure the marketability of the bonds and the adequacy of the security for the bonds. The criteria governing the eligibility of Connecticut institutions for higher education shall include limitations upon the principal amounts and the terms of education loans, the amounts and terms of education grants and qualifications and characteristics of borrowers and grant recipients.

(7) To establish guidelines, criteria and procedures not in conflict with existing statutes with respect to authority loans, education assistance programs and education loan series portfolios. Such guidelines, criteria and procedures shall not be construed as regulations within the scope of chapter 54.

(8) To receive and accept from any source loans, contributions or grants, including money, property, labor, and other things of value from any source for or in aid of an authority education assistance program or any portion thereof and, when desirable, to use such funds, property or labor only for the purposes for which it was loaned, contributed or granted.

(9) To contract with guarantors, financial institutions or other qualified loan origination and servicing organizations, which shall assist in prequalifying borrowers for education loans and which shall service and administer each education loan. The authority may require that each borrower be charged a fee to defray the costs of origination, servicing and administration of education loans. The amount and method of collection of such fee shall be determined by the authority. Participating institutions for higher education may perform any of the acts described in this subdivision, or contract for their performance by others, if these acts are authorized by the authority.

(10) To contract with a guarantor to provide security for the payment of education loans through the issuance of insurance against default or to provide a guarantee of payment covering all or a portion of any education loan made by or on behalf of the authority or by or on behalf of a participating institution for higher education from the proceeds of an authority loan.

(11) To employ attorneys, accountants, consultants, financial experts, loan processors, banks, managers, and such other employees and agents as may be necessary in its judgment, and to fix their compensation.

(12) To make authority loans, including loans on which interest may accrue and periodically be added to the principal of such loan and be subject to additional interest, and to require that the proceeds be used in accordance with guidelines established by the authority for making education loans and paying costs and fees in connection therewith.

(13) To charge and equitably apportion among participating institutions for higher education its administrative costs and expenses incurred in the exercise of the powers and duties granted by this chapter.

(14) To borrow working capital funds and other funds as may be necessary for start-up and continuing operations, as long as such funds are borrowed in the name of the authority only. Such borrowings shall be limited obligations of the character described in § 10a-232 and shall be payable solely from revenues of the authority or the proceeds of bonds pledged for that purpose.

(15) Notwithstanding any other provisions of this chapter, to commingle and pledge as security for a series or issue of bonds, only with the consent of all of the Connecticut institutions for higher education which are participating in such series or issue: (A) The education loan series portfolios and some or all future education loan series portfolios of the authority or of such institutions for higher education, and (B) the loan funding deposits of such institutions, provided education loan series portfolios and other security and moneys set aside in any fund or funds pledged for any series of bonds or issue of bonds shall be held for the sole benefit of such series or issues separate and apart from education loan series portfolios and other security and moneys pledged for any other series or issue of bonds of the authority. Bonds may be issued in series under one or more resolutions or trust agreements in the discretion of the authority.

(16) To examine records and financial reports of institutions for higher education, and to examine records and financial reports of any person, organization or institution retained under subdivision (9), (10) or (11) of this subsection.

(17) To do all things necessary or convenient to carry out the purposes of this chapter. In carrying out the purposes of this chapter, the authority may issue bonds, the proceeds of which are used to make authority loans. In the event all or a portion of such proceeds are loaned to one or more participating institutions for higher education or to any combination of participating institutions for higher education, all other provisions of this chapter shall apply to and for the benefit of the authority and the participants in such joint project or projects. Any such joint participation requires the express approval of all participants.

(18) 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 chapter, including contracts and agreements for such professional services as the board of directors shall deem necessary, including, but not limited to, financial consultants, bond counsel, underwriters and technical specialists and investment agreements, as provided in § 10a-238.

(b) The authority shall require that authority loans be (1) used solely for the purpose of education loans, and (2) in an amount not to exceed the total cost of attendance, or, in the case of an education loan made to refinance an eligible loan, in an amount not to exceed the outstanding aggregate principal amount of such eligible loan, less other forms of student assistance, as defined by the authority. In determining “other forms of student assistance” the authority may consider (A) grants received under any federal or state grant programs, (B) loan proceeds received under any federal or other state loan program, (C) scholarship, grants or other nonrepayable assistance received from government agencies, educational institutions or organizations, including, but not limited to, the authority, and (D) expected family contributions. The authority shall require that each borrower under an education loan shall use the proceeds solely for educational purposes and purposes reasonably related thereto, or for the refinancing of an eligible loan.

(c) Whenever refunding bonds are issued to refund bonds the proceeds of which were used to make authority loans, the authority may reduce the amounts of principal or interest, or both, it is owed by the participating institution for higher education which had received authority loans from the proceeds of the refunded bonds. Such institutions may, or in accordance with guidelines established by the authority shall, use any reduced amount to reduce the amount of interest being paid on education loans which the institution has made pursuant to the authority loans from the proceeds of the refunded bonds.

(d) (1) The authority may develop and require the use of a master promissory note for education loans. Each master promissory note shall allow borrowers to receive, in addition to initial education loans, additional education loans for the same or subsequent periods of enrollment. Each master promissory note shall include a provision stating that the note shall be governed by and construed pursuant to the laws of the state of Connecticut.

(2) Notwithstanding any provision of the general statutes or any regulation adopted pursuant to said statutes, each education loan made under a master promissory note pursuant to this subsection may be sold or assigned independently of any other education loan made under the same master promissory note and each such loan shall be separately enforceable on the basis of an original or copy of the master promissory note in accordance with the terms of the master promissory note.

(3) Notwithstanding any provision of the general statutes, each such master promissory note shall be fully negotiable within the meaning and for all purposes of title 42a, regardless of whether the form and character of such master promissory note qualifies under the terms of the provisions of title 42a.

(4) The authority may pledge all or any part of its interest in any such master promissory note or the education loan evidenced by such note as security for any issue of bonds or notes or any other obligations. Such pledge shall be valid and binding from the time when the pledge is made; the interest so pledged by the authority shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of any such pledge shall be valid and binding against all parties having claims of any kind in tort, contract or otherwise against the authority or any participating institution for higher education, irrespective of whether such parties have notice of the lien. Such lien shall have priority over all other liens, including, without limitation, the lien of any person who in the ordinary course of business furnishes services or materials to the authority. Notwithstanding the provisions of title 42a, neither the bond resolution nor any financing statement, continuation statement or other instrument by which a pledge or security interest is created or by which the authority’s interest in such master promissory notes is assigned need be filed in any public records in order to perfect the security interest or lien thereof as against third parties. Any outright sale by the authority of any education loan evidenced by such a master promissory note shall be effective and perfected automatically upon attachment as defined in title 42a.