Topic:
HIGHER EDUCATION; MEDICAL PERSONNEL; STUDENT FINANCIAL AID;
Location:
SCHOLARSHIPS AND LOAN PROGRAMS;

OLR Research Report


September 2, 2008

 

2008-R-0498

LOAN FORGIVENESS PROGRAMS

By: Rute Pinhel, Research Analyst II

Sarah Bourne, Associate Budget Analyst

Joan Soulsby, Principal Budget Analyst

You asked for a description of statutory loan forgiveness programs.  You also want to know which programs are still funded, particularly those for nursing education.

 

Table 1 lists and describes the various loan forgiveness and reimbursement programs.  It also includes their funding status, provided by the Office of Fiscal Analysis.  Loan forgiveness programs involve the state issuing loans for eligible candidates and forgiving all or a portion of them in return for candidates fulfilling the program's requirements (e.g., working as a nurse in the state for a certain number of years).  Loan reimbursement programs are more like grant programs; the state pays eligible individuals all or a portion of their outstanding student loans in return for fulfilling the program's requirements.

 

Loan forgiveness programs are more difficult to administer than reimbursement programs. For example, the Department of Higher Education last issued loans for the Teacher Incentive Loan Program during the 1989-90 school year, but it is still trying to collect on loans made to students who did not follow through on the program requirements and have not repaid the loans.  Loan reimbursement programs provide a greater incentive for students to follow through on the program and require less administrative oversight.

 

Table 1: Statutory Loan Forgiveness and Reimbursement Programs

Program Name

Citation

Description

Funding Status

“Engineering Connecticut” loan reimbursement grant program

10a-19e 

Up to $5,000 in student loan reimbursements for candidates who (1) are legal Connecticut residents, (2) have outstanding student loans in their names, (3) have earned an undergraduate or graduate degree in engineering from any college or university in the U.S., and (4) have been hired as a full-time engineer in Connecticut after December 31, 2005.

$250,000 appropriated in 2007

“You Belong” loan reimbursement grant program

10a-19f

Up to $10,000 in student loan reimbursements for candidates who are (1) legal Connecticut residents, (2) have outstanding student loans in their names, (3) hold a doctorate in any field from any college or university, and (4) have been employed full-time in the state after December 31, 2005 in biomedical engineering, translational medicine, or advanced product development at a company or university registered with or qualified by DECD.

$250,000 appropriated in 2007

Loan forgiveness for nursing education

10a-162a

Provided state loans for state residents entering into or advancing in the nursing profession. Forgave loans for candidates who worked as nurses in the state for five years.

Not funded

Teacher incentive loan program for teacher shortage areas

10a-163-163a

Provided loans of up to $5,000 per year for two years to students entering approved teacher education programs. It forgave 20% of the loan for every year the student taught in a Connecticut public school in a field suffering a teacher shortage.

Not funded but still collecting; $61,000 left in the program fund

Minority teacher incentive program

10-168a

Provides up to $5,000 in grants to full-time junior and senior minority students enrolled in teacher training programs at Connecticut colleges and up to $2,500 a year, for up to four years, in loan reimbursements in return for students teaching in a Connecticut public elementary or secondary school.

$481,374 appropriated in FY 08 and FY 09

Information technology loan reimbursement pilot program

10a-169b

Provided up to $2,500 a year, for up to two years, in loan reimbursements to individuals who (1) attended a Connecticut college, (2) majored in an information technology related field, and (3) were employed in an information technology position for a Connecticut company on or after January 1, 2001.

Not funded

Academic scholarship loan program/ Academic scholarship graduate student loan program

10a-70e, 170r

Provided loans to academically talented students who became certified and taught in public or approved private schools in the state. Recipients attending public colleges could receive up to $3,000 a year for four years, those attending private colleges, up to $5,000. Loans were forgiven on a graduated scale depending on the number of years teaching in a Connecticut school- with 100% forgiven after five years of teaching.

Not funded

State loan repayment program

19a-7d

Federal-state program that provides up to $15,000 per year in loan reimbursements for eligible clinicians working in community health centers.

$125,067 appropriated in FY 08 and FY 09*

*The governor imposed a $6,253 rescission on the FY 09 amount, reducing it to $118,814. This account is set up under statute to be non-lapsing, due to the nature of the multi-year agreements signed with the practitioners.  As such, the amount of state dollars available and expended in any year exceeds the appropriated amount.  Funding for the program is also supplemented by federal State Loan Repayment Program dollars.

In addition to these statutory programs, the Department of Public Health (DPH) received an appropriation of $125,000 in each of FY 08 and FY 09 to establish a loan forgiveness program for historically underrepresented students pursuing careers in nursing.  Approximately $20,000 of these funds was expended during FY 08.  The governor imposed a 5% rescission on the FY 09 amount, reducing it by $6,250 to $118,750.

 

DPH also received an appropriation of $375,000 in each of FY 08 and FY 09 to “Address Nursing & Allied Health Workforce Shortages.”  The intent was to “provide support initiatives to address nursing and allied health workforce shortages.  Such initiatives may include, but not be limited to, a faculty scholarship program, a nursing faculty student loan program, grants to higher education institutions for faculty positions, a recruitment and retention campaign to promote awareness of nursing and allied health careers, and support for an allied health workforce policy board.”  The money was transferred to the Office of Workforce Competitiveness, which is using the funds, in conjunction with the Department of Higher Education, for a competitive grant program for public and independent higher education institutions that develop and use innovative approaches or best practices in nursing, allied health, and education fields. 

RP:ts