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Committee advances CHE cleanup bill after debate over two remaining loans totaling about $27,000
Summary
A CHE cleanup bill that would delete obsolete programs passed the subcommittee; members debated how to handle two small loans (about $27,000 total) still in repayment and whether deleting the code section would effectively discharge the debt and create tax consequences for borrowers.
The Senate Education subcommittee voted to give a Commission on Higher Education cleanup bill a favorable report after discussion about how to treat two remaining loans linked to an obsolete loan program.
Donna Barton, who worked on the subcommittee summary, said the cleanup deletes many programs that no longer exist. The amendment under discussion dealt with two loan recipients whose loans remain in repayment; the total owed was described as "less than $27,000" collectively and the repayment plan would otherwise continue for another 14'15 years. Barton said CHE raised the cleanup to reconcile the code and noted the Student Loan Corporation did not initiate the deletion.
Committee members pressed staff on whether transferring collection to another entity or providing noncodified transitional language could avoid forgiving the loans if the program is removed from the code. Senator from York warned that discharging the loans could create a taxable event and impose an unexpected tax bill on borrowers; the senator estimated such a consequence could be substantial and urged exploring alternatives. The chair proposed giving the bill a favorable report and carrying the loan-resolution language to floor consideration after further research; the committee adopted the bill and voted aye.
Members agreed to pursue additional research before final floor action on the loan disposition while moving the larger cleanup package forward.
