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OLR Bill Analysis
sSB 13
AN ACT INCENTIVIZING STUDENT LOAN REPAYMENT
ASSISTANCE.
SUMMARY
This bill expands the student loan payment tax credit for qualified
employers that make eligible student loan payments on a qualified
employee’s behalf (see below). It does so by allowing the employer to
claim the credit for eligible payments it made to a student loan servicer
on a qualified employee’s behalf on any student education loan, rather
than only loans the Connecticut Higher Education Supplemental Loan
Authority (CHESLA) issued. It also establishes requirements an
employer must follow when filing for a credit refund or exchange with
the Department of Revenue Services (DRS).
The bill also caps the aggregate amount of tax credits the DRS
commissioner may reserve for this program at $10 million per calendar
or income year, and the credits must be reserved in the order of
applications the commissioner receives.
It also requires CHESLA to (1) establish a High Priority Occupation
Loan Subsidy Program to subsidize interest rates on loans it issues to
eligible individuals employed in high priority occupations and (2)
consult with the Office of Workforce Strategy (OWS) to designate
occupations as such.
Lastly, the bill makes technical and conforming changes.
EFFECTIVE DATE: July 1, 2024, except the tax credit expansion is
effective January 1, 2025, and applicable to calendar or income years
commencing on or after that date.
QUALIFIED EMPLOYER TAX CREDIT OR REFUND
Existing law allows qualified employers that make payments on 2024SB-00013-R000523-BA.DOCX
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qualified employees’ eligible student loans (i.e., CHESLA loans) to claim
a tax credit or refund equal to 50% of the payments made up to a
maximum annual credit of $2,625 per employee per calendar or income
year. By law, “qualified employees” are Connecticut residents who (1)
earned their first bachelor’s degree within the last five years; (2) are
employed full time (i.e., at least 35 hours per week) at a qualified
employer; and (3) are not an owner, member, partner, or family member
of an otherwise qualified employer.
The bill expands this tax credit by allowing qualified employers to
claim it for eligible student loan payments it made on behalf of an
eligible employee to a student loan servicer (see below) on any student
education loan, rather than only payments to CHESLA for CHESLA-
issued loans.
By law, and under the bill, a “student loan servicer” is any person,
regardless of location, that is responsible for servicing any student
education loan to any student loan borrower (CGS § 36a-846(12)).
TAX CREDIT APPLICATION REQUIREMENTS
To claim the student loan payment tax credit, the bill requires an
eligible qualified employer to file an application with the DRS
commissioner in a form and manner he prescribes. The application must
include the following:
1. a list of qualified employees on whose behalf the qualified
employer will be making an eligible student loan payment,
2. the total amount the qualified employer will pay towards each
qualified employee’s student education loan in the calendar or
income year,
3. the employee’s student loan servicer, and
4. any other information the commissioner requires.
The bill requires the DRS commissioner, upon receiving an
application, to determine and reserve the credit amount the qualified 2024SB-00013-R000523-BA.DOCX
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employer will be entitled to claim and to issue a voucher in that amount
to the employer. The bill prohibits a qualified employer from claiming
or a qualified small business (i.e., a qualified employer with gross
receipts of $5 million or less) from exchanging more than the amount in
the voucher for any calendar or income year.
HIGH PRIORITY OCCUPA TION LOAN SUBSIDY PROGRAM
The bill requires CHESLA to establish a High Priority Occupation
Loan Subsidy Program, subject to available funding. The program must
subsidize interest rates on loans CHESLA issues to refinance eligible
loans to individuals employed in high priority occupations who meet
the eligibility criteria established by the bill.
High Priority Occupation Designation
Under the bill, CHESLA must consult with OWS to designate high
priority occupations under the program that (1) promote state residents’
health, welfare, or education; (2) have a high demand for their services,
as CHESLA and OWS determines; and (3) are experiencing or are
projected to experience a workforce shortage that may affect the level of
services provided.
Eligibility Criteria and Administrative Guidelines
CHESLA must also consult with OWS to establish program eligibility
criteria, which under the bill must include the following:
1. applicant requirements, including employment requirements;
2. interest rate subsidies and principal limits on authority loans
subject to the High Priority Occupation Loan Subsidy Program;
3. the process for verifying applicants’ employment; and
4. the requirement that an interest rate subsidy through the
program terminate for a subsidy recipient who no longer meets
the program’s employment requirements during the loan’s term.
Account Expenditure Guidelines
The bill requires CHESLA to establish a separate, non-lapsing 2024SB-00013-R000523-BA.DOCX
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account to hold program funds. The account must contain any moneys
required by law to be deposited in it, including any state appropriation
or any sale proceeds from bonds issued for that purpose.
Additionally, CHESLA must use the funds in the program’s account
to do the following:
1. subsidize loans under the program,
2. cover reasonable and necessary expenses for the program’s
administration,
3. issue authority loans to refinance one or more eligible loans, and
4. maintain a reserve to cover any losses from issuing authority
loans.
COMMITTEE ACTION
Higher Education and Employment Advancement Committee
Joint Favorable Substitute Change of Reference - FIN
Yea 22 Nay 0 (03/14/2024)
Finance, Revenue and Bonding Committee
Joint Favorable
Yea 44 Nay 7 (04/02/2024)