OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

sHB-6915

AN ACT CONCERNING A STUDENT LOAN BILL OF RIGHTS.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 16 $

FY 17 $

Banking Dept.

BF - See Below

See Below

See Below

BF=Banking Fund

Municipal Impact: None

Explanation

The bill creates a new student loan ombudsman position in the Banking Department, establishes the ombudsman's duties and requires the implementation and maintenance of a student loan borrowers education course. The associated costs are shown below:

Student Loan Ombudsman Related Costs

 

FY 16 $

FY 17 $

Ombudsman salary

91,000

95,095

Fringe Benefit Costs1

75,466

78,862

Course Development

-

25,000

Total

166,466

198,957

 

An Ombudsperson position and fringe benefits result in an estimated cost of $166,466 in FY 16 and $198,957 in FY 17. The student loan education course required in FY 17 is anticipated to cost $25,000 based on previous Department of Education curriculum development and printing costs.

The bill allocates up to $500,000 of annual licensing fees from all nondepository financial institutions for use by the department in implementing the provisions of the bill described above. The bill does not authorize the Banking Department to expend the licensing fee funds therefore it is uncertain how monies will be used for the student loan ombudsman. To the extent that $500,000 is provided from annual licensing fees from all nondepository financial institutions, annual Banking Fund revenue will be decreased by $500,000.

The bill expands the scope of services subject to Banking Department licensure to student loan servicers in FY 17. While the number of student loan servicers subject to licensure is not known, it is expected to range from 20 to 50 student loan servicers. Banking Fund revenue from student loan servicers is estimated to range from $36,000 to $90,000 from biennial licensure ($1,000) and initial investigation ($800) fees in FY 17. It is anticipated that the department's additional licensure and enforcement responsibilities will not result in a fiscal impact .

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation and the number of initial and renewal licenses issued.

1 The fringe benefit costs for employees funded out of other appropriated funds are budgeted within the fringe benefit account of those funds, as opposed to the fringe benefit accounts within the Office of the State Comptroller. The estimated active employee fringe benefit cost associated with most personnel changes for other appropriated fund employees is 82.91% of payroll in FY 16 and FY 17.