BILL ANALYSIS Ó
SB 150
Page 1
Date of Hearing: September 11, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 150
(Nguyen) - As Amended June 22, 2015
-----------------------------------------------------------------
|Policy |Revenue and Taxation |Vote:| 7 - 0 |
|Committee: | | | |
| | | | |
| | | | |
-----------------------------------------------------------------
Urgency: Yes State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill provides an exclusion from gross income under the
Personal Income Tax Law for income that would otherwise result
from a forgiven student loan if:
1)The individual is granted a discharge pursuant to an agreement
between ECMC Group, Inc., Zenith Education Group, and the
Consumer Financial Protection Bureau concerning the purchase
of certain assets of Corinthian Colleges, Inc., dated February
2, 2015;
SB 150
Page 2
2)The individual is granted a discharge pursuant to Paragraph 23
of the William D. Ford Federal Direct Loan Program Borrower's
Rights and Responsibilities Statement because of either of the
following: (a) the individual could not complete a program of
study because the school closed; or (b) the individual
successfully asserts that the school did something wrong or
failed to do something that it should have done; or
3)The individual attended a Corinthian Colleges, Inc., school on
or before May 1, 2015, is granted a discharge of any student
loan made in connection with attending that school, and that
discharge is not excludable from gross income as a result of
the reasons listed above.
FISCAL EFFECT:
1)Insignificant costs to Franchise Tax Board (FTB) to administer
changes to forms and systems.
2)Estimated GF revenue decreases of $34 million, $100,000, and
$100,000 in FY 2015-16, FY 2016-17, and FY 2017-18,
respectively.
COMMENTS:
Purpose. According to the author, many former students of the
closed campuses of Corinthian College (including many Heald
College campuses in California) are seeking a discharge of some
or all of their student loan debt. Pursuant to a federal
agreement relating to the forced closure, Corinthian agreed to
forgive $480 million in outstanding student loans. In addition,
based on estimates from the federal Department of Education,
Corinthian students in California may be eligible for as much as
SB 150
Page 3
$850 million in total federal and private student debt relief.
Absent an exclusion, debt that is cancelled, discharged, or
forgiven is considered income for tax purposes. The author
contends approximately 13,000 California students are unable to
complete their degrees as a result of the college closures, and
she argues those students should not be responsible for income
tax on their forgiven debt.
Analysis Prepared by:Joel Tashjian / APPR. / (916)
319-2081