Substitute Senate Bill No. 1088

Public Act No. 01-102

AN ACT CONCERNING THE CONNECTICUT STUDENT LOAN FOUNDATION.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subdivision (1) of section 10a-204 of the general statutes is repealed and the following is substituted in lieu thereof:

(1) To lend money or guarantee the loan of money, and to acquire and sell loans, upon such terms and conditions as the board or any rating agency or underwriter may prescribe, within the limitations contained in this chapter [or] and in Title IV, Part B of the Higher Education Act of 1965, where applicable, to assist persons in meeting the expenses of education; provided no such person shall receive any loan or loans in excess of such amounts as the board may authorize or amounts which are in conformance with Title IV, Part B of the Higher Education Act of 1965, [as appropriate] where applicable. The board may procure a policy or policies of group life insurance to insure the repayment of loans made or guaranteed by the corporation in the event of the death of an individual to whom a loan is made or guaranteed hereunder. The board may charge any person receiving a loan under the provisions of this subsection an amount deemed reasonable by the board but in no event shall such amount exceed the amount provided by the provisions of Title IV, Part B of the Higher Education Act of 1965, [when] where applicable.

Sec. 2. Subdivision (8) of section 10a-204 of the general statutes is repealed and the following is substituted in lieu thereof:

(8) To perform such other acts as may be necessary or appropriate to carry out effectively the objects and purposes of the corporation, as specified in this chapter or in Title IV, Part B of the Higher Education Act of 1965, where applicable.

Sec. 3. Subsection (a) of section 10a-204b of the general statutes is repealed and the following is substituted in lieu thereof:

(a) The Connecticut Student Loan Foundation, a nonprofit corporation is authorized from time to time to issue its bonds, notes or other obligations in such principal amounts as in the opinion of the corporation shall be necessary to provide sufficient funds for carrying out the purposes set forth in subsections (3) and (4) of section 10a-201 [with respect to loans originated pursuant to Title IV, Part B of the Higher Education Act of 1965, 20 USC 1071 et seq.,] including the payment, funding or refunding of the principal of, or interest or redemption premiums on, any bonds, notes or other obligations issued by it whether the bonds, notes or other obligations or interest to be funded or refunded have or have not become due, the establishment of reserves to secure such bonds, notes or other obligations and all other expenditures of the corporation incident to and necessary or convenient to carry out the purposes set forth in subsections (3) and (4) of section 10a-201. [with respect to loans originated pursuant to Title IV, Part B of the Higher Education Act of 1965, 20 USC 1071, et seq.]

Sec. 4. Subsection (r) of section 10a-204b of the general statutes is repealed and the following is substituted in lieu thereof:

(r) The state further covenants with the [purchases] purchasers and all other subsequent owners and transferees of bonds, notes or other obligations issued by the corporation pursuant to this section, in consideration of the acceptance of and payment for the bonds, notes or other obligations, until the bonds, notes or other obligations, together with the interest thereon, with interest on any unpaid installment of interest and all costs and expenses in connection with any action or proceeding on behalf of the owners, are fully met and discharged or unless expressly permitted or otherwise authorized by the terms of each contract and agreement made or entered into by or on behalf of the corporation with or for the benefit of such owners, that the state: (i) Will not create or cause to be created any lien or charge on the assets or revenues pledged to secure such bonds, notes or other obligations, other than a lien or pledge created thereon pursuant to this section; (ii) will not in any way impair the rights, exemptions or remedies of the owners; and (iii) will not limit, modify, rescind, repeal or otherwise alter the rights or obligations of the corporation to take such action as may be necessary to fulfill the terms of the resolution authorizing the issuance of the bonds, notes or other obligations; provided, that nothing herein shall preclude the state from exercising its power, through a change in law, to limit, modify, rescind, repeal or otherwise alter this chapter if and when adequate provision shall be made by law for the protection of the holders of outstanding bonds, notes or other obligations, pursuant to the resolution under which the bonds, notes or other obligations are issued. The corporation is authorized to include this covenant of the state, as a contract of the state, in any agreement with the owners of any bonds, notes or other obligations, in any credit facility or reimbursement agreement with respect to the bonds, notes or other obligations and in any agreement authorized by [subsections] subsection (p) or (q) of this section.

Sec. 5. Subsection (b) of section 10a-206 of the general statutes is repealed and the following is substituted in lieu thereof:

(b) Notwithstanding anything to the contrary provided in this section, the corporation may make or guarantee a loan under terms and conditions with respect to repayment which are more lenient or more restrictive as to the borrower than prescribed by this section if the board determines that such action on its part conforms to [applicable federal laws and regulations or is justified by special circumstances and would be consistent with the general objectives of the corporation] Title IV, Part B of the Higher Education Act of 1965, where applicable.

Sec. 6. Section 12-742 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) In cases where any person or entity is due a refund of state income taxes, and that same person owes a debt or obligation for which the Commissioner of Administrative Services is seeking reimbursement, the Commissioner of Revenue Services, upon notification by the Commissioner of Administrative Services, shall withhold the payment of said refund to such person or entity to the extent of such debt or obligation, provided the Commissioner of Revenue Services shall notify such debtor that he or she has the right to a hearing before an officer designated by the Commissioner of Administrative Services if he or she contests the validity or amount of the Commissioner of Administrative [Services's] Services' claim, except that where the debt or obligation is a debt resulting from failure to pay an order for child support, the administrative review process will be held in accordance with subsection (c) of section 52-362e. If the debtor fails to apply in writing to the Commissioner of Administrative Services for a hearing within sixty days of the issuance of notice of withholding, the Commissioner of Revenue Services shall remit the amount of the withheld refund to the Commissioner of Administrative Services. If the debtor elects an administrative hearing within this time, the Commissioner of Revenue Services shall remit the amount of the withheld refund in accordance with any decisions of the hearing officer or the court upon an appeal of the hearing officer's decision.

(b) (1) In cases where any person or entity is due a refund of state income taxes, and that same person is in default of a student loan made or guaranteed by the Connecticut Student Loan Foundation, the Connecticut Student Loan Foundation shall notify the Commissioner of Administrative Services of such default. The Commissioner of Revenue Services, upon notification by the Commissioner of Administrative Services, shall withhold the payment of said refund to such person to the extent of such default, provided the Commissioner of Revenue Services shall notify such person in default that he or she has the right to a hearing before an officer designated by the Commissioner of Administrative Services if he or she contests the validity or amount of the Commissioner of Administrative Services' claim. If the person in default fails to apply in writing to the Commissioner of Administrative Services for a hearing within sixty days of the issuance of notice of withholding, the Commissioner of Revenue Services shall remit the amount of the withheld refund to the Commissioner of Administrative Services, who in turn shall remit the amount of such withheld refund to the Connecticut Student Loan Foundation. If the person in default elects an administrative hearing within this time, the Commissioner of Revenue Services shall remit the amount of the withheld refund in accordance with any decisions of the hearing officer or the court upon an appeal of the hearing officer's decision. If a person in default also owes a debt or obligation described in subsection (a) of this section, the refund shall be applied against such debt or obligation before being credited against the amount of the default.

(2) The Commissioner of Revenue Services, the Commissioner of Administrative Services and the president of the Connecticut Student Loan Foundation, on behalf of such corporation, shall enter into an agreement for the crediting of income tax refunds against the amount a taxpayer is in default of a loan pursuant to subdivision (1) of this subsection. The agreement shall include procedures for the Connecticut Student Loan Foundation to (A) notify the Commissioner of Administrative Services of a default, and the amount of the default, and (B) reimburse the Department of Administrative Services and the Department of Revenue Services for any costs incurred by the departments in carrying out the provisions of this subsection.

Sec. 7. This act shall take effect from its passage, except that section 6 shall take effect October 1, 2001.

Approved June 6, 2001