96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
SB3704

 

Introduced 2/11/2010, by Sen. Edward D. Maloney

 

SYNOPSIS AS INTRODUCED:
 
New Act

    Creates the Job Creation and Education Act. Creates the Job Creation Through Education Opportunity Program to reimburse education-related expenses for students who obtain an associate or bachelor's degree in the State and who live, work, and pay taxes in the State thereafter. Contains provisions concerning the administration of the program. Creates an income tax credit based on student loan payments. Contains other provisions.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1     AN ACT concerning revenue.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 1. Short title. This Act may be cited as the Job
5 Creation and Education Act.
 
6     Section 5. Definitions. As used in this Act:
7     "Accredited junior college, college, or university" means:
8         (1) any campus of the State community college system;
9         (2) any State university; and
10         (3) any educational institution that is located in this
11     State and has authorization to confer an associate degree
12     or a bachelor's degree.
13     "Benchmark Loan Payment" means the figure described in
14 Section 10 of this Act.
15     "Educational opportunity tax credit" means the tax credit
16 provided for in Section 15 of this Act.
17     "Resident" means a resident of this State.
18     "Opportunity contract" means the contract described in
19 Section 10 of this Act.
20     "Principal cap" means the cap described in Section 10 of
21 this Act.
22     "State Board" means the Illinois State Board of Education.
 

 

 

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1     Section 10. Job Creation Through Educational Opportunity
2 Program established.
3     (a) The Job Creation Through Educational Opportunity
4 Program, referred to in this Act as "the program," is created
5 to reimburse education-related costs for residents of this
6 State who obtain an associate degree or a bachelor's degree in
7 this State, and live, work, and pay taxes in this State
8 thereafter. The program is designed to achieve the following
9 goals:
10         (1) promote economic opportunity for people in this
11     State by ensuring access to the training and higher
12     education that higher-paying jobs require;
13         (2) bring more and higher-paying jobs to this State by
14     increasing the skill level of this State's workforce;
15         (3) offer educational opportunity and retraining to
16     people impacted by job loss, workplace injury, disability
17     or other hardship;
18         (4) keep young people in this State through incentives
19     for educational opportunity and creation of more
20     high-paying jobs; and
21         (5) accomplish all of the goals in this subsection with
22     as little bureaucracy as possible.
23     (b) A principal cap limits the loan principal that can
24 serve as the basis for claiming the Educational Opportunity Tax
25 Credit. The cap is based on in-state tuition and mandatory fees
26 for either the State community college system or the State

 

 

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1 University system, depending on whether the opportunity
2 contract is for pursuit of an associate degree or of a
3 bachelor's degree, respectively.
4     (c) For an individual earning a degree from the State
5 community college system or from a State University, the
6 relevant financial aid office shall certify, once the
7 individual has earned the degree, whether or not the total
8 principal of loans the individual received as part of that
9 individual's financial aid package exceeds the cost of in-state
10 tuition and mandatory fees incurred in pursuit of the degree.
11 That cost constitutes the principal cap for such an individual.
12     (d) For an individual earning a degree from any other
13 accredited State junior college, college, or university, the
14 relevant financial aid office shall certify, once the
15 individual has earned the degree, whether or not the total
16 principal of loans the individual received as part of that
17 individual's financial aid package exceeds the published
18 in-state tuition and mandatory fees for full-time enrollment in
19 the State community college system or in the State university
20 system, depending on whether the degree is an associate degree
21 or a bachelor's degree, respectively, during the relevant
22 years. The published in-state tuition and mandatory fees
23 constitute the principal cap for such an individual. If the
24 individual has not attended full time throughout the pursuit of
25 that individual's degree, an appropriate principal cap must be
26 determined in a manner consistent with the principles set out

 

 

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1 in this subsection.
2     (e) For an individual whose student loans exceed the
3 principal cap, a benchmark loan payment must be calculated as
4 follows. The financial aid office shall calculate what the
5 monthly payment would be on a loan for the amount of the
6 principal cap, to be paid over the years and at the interest
7 rate offered for federal Stafford loans under United States
8 Code, Section 1077a, during the individual's last year of
9 enrollment. The benchmark loan payment must be specified on the
10 individual's Opportunity Contract.
11     (f) The State Board shall draft an Opportunity Contract for
12 use in enrolling people in the program. The terms of the
13 Opportunity Contract must require an individual who wishes to
14 participate in the program to:
15         (1) certify that that individual is a resident of this
16     state;
17         (2) agree to attend and to obtain a specified degree,
18     either an associate degree or a bachelor's degree, from an
19     accredited State junior college, college, or university.
20     The individual need not obtain the degree from the
21     institution in which that individual originally enrolled,
22     so long as all course work toward the degree is performed
23     at accredited State junior colleges, colleges or
24     universities;
25         (3) agree to live in this State while pursuing the
26     degree. The individual shall also agree to live in this

 

 

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1     state after obtaining the degree during any period when
2     that individual seeks to take advantage of the Educational
3     Opportunity Tax Credit;
4         (4) agree to maintain records relating to loan payments
5     claimed under the Educational Opportunity Tax Credit for 5
6     years after those payments are claimed; and
7         (5) with respect to educational loans, agree to the
8     following:
9             (A) the individual may claim the Educational
10         Opportunity Tax Credit only with respect to loans that
11         are part of that individual's financial aid package and
12         that have a term of at least 8 years;
13             (B) if the individual in any way accelerates
14         repayment, the individual forfeits any right to claim
15         an Educational Opportunity Tax Credit for that taxable
16         year or any future taxable year; and
17             (C) the individual may refinance the loans only if
18         they remain separate from other debt and if the effect
19         of the refinancing is to decrease both the annual
20         repayment and the total remaining indebtedness. In
21         exchange for the consideration outlined in this
22         subsection, the State shall agree to permit the
23         individual to take advantage of the Educational
24         Opportunity Tax Credit.
25     (g) The Opportunity Contract must leave space for the
26 accredited State junior college, college, or university to

 

 

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1 certify that the individual has obtained the relevant degree,
2 and to certify whether or not the loan principal that the
3 individual incurs in pursuing the relevant degree exceeds the
4 principal cap.
5     (h) The Program must be administered as follows:
6     (i) Any resident of this state who gains admission to an
7 accredited state junior college, college or university and who
8 receives financial aid in the form of loans must have the
9 opportunity to participate in the program. The financial aid
10 office of the relevant institution shall offer to such people
11 the chance to sign an Opportunity Contract with the State. The
12 financial aid office shall retain the Opportunity Contract
13 until the individual obtains the degree.
14     (j) When the individual obtains the degree, the individual
15 shall specify on the Opportunity Contract the source, principal
16 amount, interest rate, and term of any loans that are part of
17 the individual's financial aid package. The Opportunity
18 Contract must contain certification that the individual has
19 obtained the relevant degree and must specify whether the
20 individual's loans exceed the principal cap and, if
21 appropriate, what the benchmark loan payment is. The individual
22 shall then file the Opportunity Contract with the Secretary of
23 State. Every accredited State public junior college, college,
24 and university located in this State shall develop procedures
25 to facilitate this process, in consultation with the Secretary
26 of State.

 

 

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1     (k) When the individual files the Opportunity Contract with
2 the Secretary of State, that individual becomes eligible to
3 claim the Educational Opportunity Tax Credit, subject to the
4 requirements of this Act. The individual may thereafter take
5 advantage of any forbearance or deferment provisions in the
6 relevant loan agreements without forfeiting the right to claim
7 the Educational Opportunity Tax Credit when the individual
8 resumes repayment. The program must commence the first semester
9 after the effective date of this Act. State residents who, when
10 the program commences, are enrolled in an associate or a
11 bachelor's degree program at an accredited junior college,
12 college, or university, may participate, subject to the same
13 essential terms as other program participants. When such an
14 individual obtains the relevant degree, it must be specified in
15 the individual's Opportunity Contract what percentage of the
16 course work completed in pursuit of the degree was performed
17 while the individual was participating in the program. The
18 principal cap and benchmark loan payment must be calculated in
19 the ordinary way as provided in this Act, but the individual
20 must then apply the percentage in this subsection to actual
21 payments or to the benchmark loan payment, whichever applies,
22 in determining the amount the individual can claim under the
23 Educational Opportunity Tax Credit for a given year.
24     It is the intent of the General Assembly that neither the
25 existence of the program nor the benefits provided under the
26 Educational Opportunity Tax Credit serve as justification to

 

 

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1 decrease other funds appropriated or allocated to accredited
2 State junior colleges, colleges, or universities, including
3 institutions in the State community college system and the
4 State university system, or to other higher education programs.
5     The State board shall adopt rules as necessary to carry out
6 the purposes of this Act.
 
7     Section 15. Credit for Educational Opportunity.
8     (a) Definitions. As used in this section of this Act:
9         "Benchmark loan payment" has the same meaning as in
10     Section 5 of this Act.
11         "Full Time" employment means employment with a normal
12     work week of 32 hours or more.
13         "Part Time" employment means employment with a normal
14     work week of between 16 and 32 hours.
15         "Qualified Employee" means an employee who is eligible
16     for the credit provided in this Section and who is employed
17     at least part time.
18         "Opportunity Contract" means the contract described in
19     Section 10 of this Act.
20         "Opportunity Program Participant" means an individual
21     who enters into an Opportunity Contract with the State,
22     obtains the specified degree and complies with the
23     requirements under Section 10 of this Act.
24         "Resident Individual" means a resident of the State.
25         "Term of Employment" includes all months when the

 

 

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1     individual is actually employed. It includes time periods
2     when an individual is on leave or vacation. It extends to
3     the full year for people working for employers who
4     customarily operate only during a regularly recurring
5     period of 9 months or more in a calendar year. For people
6     working for employers who customarily operate only during
7     regularly recurring periods of less than 9 months in a
8     calendar year, including seasonal employment, the Term of
9     Employment extends only to time periods when the individual
10     is actually working.
11     (b) A taxpayer constituting an Opportunity Program
12 Participant or an employer of a qualified employee is allowed a
13 credit against the tax imposed by subsections (a) and (b) of
14 Section 201 of the Illinois Income Tax Act for each taxable
15 year under the terms established in this Section. The credit is
16 created to implement the Job Creation Through Educational
17 Opportunity Program established under Section 10 of this Act.
18 The credit may not reduce the tax otherwise due under the
19 Illinois Income Tax Act to less than zero. A taxpayer entitled
20 to the credit for any taxable year may carry over and apply to
21 the tax liability for any one or more of the next succeeding 10
22 years the portion, as reduced from year to year, of any unused
23 credits. More than one taxpayer may claim a credit based on
24 loan payments actually made to a relevant lender or lenders to
25 benefit a single opportunity program participant, but no 2
26 taxpayers may claim the credit based on the same payment.

 

 

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1     (c) The following provisions govern the calculation of the
2 credit in this Section.
3         (1) If the relevant Opportunity Program Participant's
4     Opportunity Contract limits the amount of the credit to a
5     benchmark loan payment, and the relevant Opportunity
6     Program Participant's actual monthly payment due is higher
7     than that amount, then the credit claimed may not exceed
8     the product of the benchmark loan payment and the number of
9     months in which the taxpayer made loan payments.
10         (2) If the relevant Opportunity Program Participant's
11     Opportunity Contract certifies that the principal for the
12     relevant loans is at or below the level of the principal
13     cap, or if the relevant opportunity program participant's
14     actual monthly payment is below the benchmark loan payment,
15     the taxpayer may claim a credit based only on regularly
16     scheduled loan payments actually made.
17         (3) If the credit is claimed on behalf of an individual
18     who was already enrolled in an associate or a bachelor's
19     degree program at an accredited junior college, college, or
20     university, as defined in Section 5 of this Act, on the
21     commencement of the Job Creation Through Educational
22     Opportunity Program under Section 10 of this Act, the
23     percentage figure listed in the Opportunity Contract must
24     be applied to the amount determined under paragraph (1) or
25     (2).
26     (d) An Opportunity Program Participant may claim the credit

 

 

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1 only if the participant is a resident individual. The
2 participant may claim the credit based only on regular payments
3 made during months in which the individual was working for an
4 employer located in this state. A married couple filing jointly
5 under the Illinois Income Tax Act may claim the credit only to
6 the extent that the spouse on whose behalf the credit is
7 claimed meets these requirements.
8     (e) A taxpayer constituting an employer may claim the
9 credit under this Section under the following circumstances.
10 The employer may undertake to make partial or full loan
11 payments directly to the relevant lender or lenders on behalf
12 of a qualified employee, having taken reasonable steps to
13 ascertain that the employee is in fact a qualified employee,
14 and may claim a credit based on amounts that came due and were
15 paid by the employer during the term of employment. To receive
16 the credit, the employer must retain for 5 years any proof of
17 eligibility that the employee or independent contractor
18 provides.
19     (f) The employer may claim a credit for the amount that the
20 qualified employee could have claimed during any months when
21 the qualified employee was employed, had the qualified employee
22 made the partial or full loan payments instead, under
23 conditions where the qualified employee had sufficient income
24 to claim the full credit for the taxable year. If the qualified
25 employee is employed only on a part-time basis, the employer
26 may claim a credit only up to half of the total that the

 

 

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1 qualified employee could have claimed had the qualified
2 employee made all payments and earned sufficient income to
3 claim the full credit for the taxable year, but the amount the
4 employer claims must still be based on amounts actually paid.
 
5     Section 97. Severability. The provisions of this Act are
6 severable under Section 1.31 of the Statute on Statutes.