SOURCE OF PROGRAM FUNDING.

(a) The governing board of each institution of higher education, including the Texas State Technical College System, shall cause to be set aside:

(1) not less than 15 percent nor more than 20 percent out of each resident student's tuition charge under Section 54.051 as provided by the General Appropriations Act for the applicable academic year;

(2) three percent out of each nonresident student's tuition charge under Section 54.051;

(3) not less than six percent nor more than 20 percent out of each resident student's hourly tuition charge exclusive of out-of-district charges, and $1.50 out of each nonresident student's hourly tuition charge, for academic courses at a public community or junior college; and

(4) not less than six percent nor more than 20 percent of hourly tuition charges exclusive of out-of-district charges for vocational-technical courses at a public community or junior college.

(b) Of the funds set aside under this section by an institution, not less than 90 percent shall be used for Texas Public Educational Grants and not more than 10 percent shall be used for emergency loans under Subchapter D of this chapter.

(c) Except as otherwise provided by this subsection, funds set aside for Texas Public Educational Grants under this section from tuition paid by resident students may be used only for grants awarded to resident students, and funds set aside for those grants under this section from tuition paid by nonresident students may be used only for grants awarded to nonresident students and students who are citizens of countries other than the United States. After the end of the sixth class week of each semester, an institution may transfer any excess funds set aside from tuition paid by resident or nonresident students to the funds set aside for grants awarded to the other class of students. Priority for awarding grants from any excess funds set aside from tuition paid by resident students shall be given to resident students.

(d) Interest earned from the funds set aside for Texas Public Educational Grants may be spent only for grants to students as provided by this subchapter.

(e) To supplement money set aside under Subsection (a), the governing board of an institution of higher education may use money received by the institution from the fee for issuance of collegiate license plates under Section 504.615, Transportation Code, for awarding Texas Public Educational Grants. The board may use the money to award grants to both resident and nonresident students, except that the board shall give priority to grants for resident students. Notwithstanding Subsection (b), the board may not use the money for emergency loans under Subchapter D.