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.

As Amended by House "A" (LCO 6170)

House Calendar No.: 168

OFA Fiscal Note

State Impact:

Note: 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 borrower's education course.

The bill requires that the above be provided within available appropriations. It does not appear that this mandates that the agency perform the activity regardless of available funding, therefore the potential costs are described below.

An Ombudsman 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 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 bill establishes a separate nonlapsing student loan ombudsman account within the Banking Fund. Beginning in FY 17, fees from the licensure of student loan servicers will be deposited in the account and used to pay for the administration of the student loan ombudsman duties and responsibilities. The amount estimated to be deposited in FY 17 ranges from $36,000 to $90,000 as described above.

It should be noted that while the bill establishes the ombudsman position in FY 16, the revenue from the licensing fees does not start until FY 17. Further, in FY 17 the ombudsman costs are higher than the anticipated licensing fee revenue. Therefore, in FY 16 the agency may either: 1) not hire an ombudsman until the nonlapsing student loan ombudsman account has sufficient funding, or 2) utilize existing agency Personal Services funding, if available.

House “A” strikes the underlying bill and its associated fiscal impact and results in the impact described above.

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.