OLR Bill Analysis

sHB 7212

AN ACT CONCERNING THE PROMOTION OF LOAN FORGIVENESS PROGRAMS.

SUMMARY

This bill requires public service employers to provide (1) informational materials about certain federal student loan forgiveness programs to newly hired employees within two weeks of their start date and (2) certain loan forgiveness certification forms to current employees upon request. The Department of Banking's student loan ombudsman (hereinafter “ombudsman”) must create or copy federally-designed informational materials, make them available online, and distribute them to public service employers.

The bill defines “public service employers” as organizations, agencies, or entities that are public service organizations, including local and regional boards of education (see BACKGROUND). The bill does not apply to federal or tribal nation government organizations, agencies, or entities; or tribal nation institutions of higher education.

The bill specifies that it (1) allows employees to report their employers to the ombudsman for alleged violations and (2) does not affect the attorney general's authority to pursue an action to enforce the bill's provisions.

EFFECTIVE DATE: July 1, 2017

LOAN FORGIVENESS INFORMATIONAL MATERIALS

Ombudsman Duties

The bill requires the ombudsman to distribute to public service employers informational materials that increase awareness about the federal Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness (TLF) programs (see BACKGROUND). At a minimum, these materials must include the following:

1. a standardized letter notifying employees of the PSLF and TLF program eligibility and participation requirements and recommending that employees contact a student loan servicer for additional information,

2. a detailed fact sheet describing the programs that also contains the ombudsman's telephone number and email address for reporting alleged violations by employers, and

3. a “frequently asked questions” document with answers to questions about the programs.

Under the bill, the ombudsman must either create such documents or use federal agency-designed documents that meet the above requirements. The bill also requires the ombudsman to make the documents available on the Department of Banking's website. Each biennium the ombudsman must verify the documents' accuracy and update any incorrect or obsolete information they contain.

Public Service Employer Duties

The bill requires public service employers to disseminate the ombudsman-provided informational materials to new employees within two weeks of their start date. Dissemination may occur by mail, email, or in person. Employers must also (1) provide the PSLF certification form to current employees upon request and (2) conspicuously display the ombudsman-provided fact sheet on its premises.

Under the bill, if the ombudsman receives a complaint of an alleged violation by an employer, it must be investigated within 30 days and made publicly available. The ombudsman must issue corrective actions to an employer for a violation, and the employer may contest the order within 15 days of its issuance.

BACKGROUND

Public Service Organization

As defined in federal regulation, a “public service organization” for purposes of public service loan forgiveness is the following:

1. a federal, state, local, or tribal government organization, agency, or entity;

2. a public child or family service agency;

3. a tribal college or university;

4. a federally tax-exempt, nonprofit organization that does not engage in religious activities, unless they are qualifying activities unrelated to religious instruction, worship services, or proselytizing; or

5. a private organization that provides certain public services.

Such public services include, among others, emergency management, military service, public safety, public interest law, early childhood education, public service for individuals with disabilities and the elderly, public health, public education, and public library services (34 C.F.R. 685.219(b)).

Public Service Loan Forgiveness

This federal program forgives the remaining balance of certain federal student loans after 10 years of monthly payments for individuals who work full-time for public service employers. The first group of individuals will be eligible for loan forgiveness in October 2017 (34 C.F.R. 685.219).

Teacher Loan Forgiveness

This federal program forgives up to a total of $17,500 for certain federal student loans for individuals who teach full-time for five consecutive academic years in certain elementary and secondary schools and educational service agencies that serve low-income families and meet other qualifications (34 C.F.R. 685.217).

COMMITTEE ACTION

Higher Education and Employment Advancement Committee

Joint Favorable Substitute

Yea

14

Nay

7

(03/21/2017)