State Reps. Clyde and Phillips Urge Gov. Kasich to Veto Controversial Provision Regarding Student Loans

State Reps. Kathleen Clyde and Debbie Phillips sent a letter urging Gov. John Kasich to exercise his line item veto power over a provision contained in House Bill 487.  The provision would grant the State Treasurer the authority to deposit any unexpected revenues paid for by Ohio college students in the State Treasurer’s office administrative fund. 

The Full letter can be seen below:

Dear Governor Kasich,

We write to respectfully ask for your consideration of using the line-item veto power on ORC Section 3366.05 contained in Am. Sub. H.B. 487. After carefully reviewing this section of proposed law, we believe it to be contrary to the best interests of Ohio’s college students.

This portion of the mid-biennium budget bill received little scrutiny.  To our knowledge, this proposed law was added in Senate Finance Committee with little, if any, discussion on the language and its potential consequences.

This section of the code authorizes the Treasurer of State to operate as a servicer of federal student loans “to take such actions and to enter into such contracts and to execute all instruments necessary or appropriate to act” as a servicer; deposit revenues received for this purpose in a custodial fund located outside the state treasury; and specifies that any revenues that are unexpended must be deposited in the Treasurer’s state administrative fund. It is this last provision, in particular, that causes us the greatest concern.

As written, this provision would allow the State Treasurer to use any “unexpended revenues” paid for by Ohio college students to bolster the administrative fund for the State Treasurer’s office.  Although the act of servicing student loans by the State Treasurer is not necessarily disagreeable, allowing excess student loan funds to be used for unspecified administrative purposes is bad public policy.

Additionally, using these “unexpended revenues” for administrative spending is overly broad, and there is no requirement that these funds be used to support Ohio college students directly or indirectly.

It remains unclear where the language came from and who is supportive of potentially authorizing the use of student loan interest and fees to support the administrative fund for the State Treasurer’s office.  If this is a law change the State Treasurer sought through the MBR, it would have been helpful to hear directly from him on precisely how he plans to use any unexpended revenues.

As student loan debt tops $1 trillion throughout the nation, and students in Ohio average $27,000 in debt for a four year degree, we must do all we can to help make college affordable for all Ohioans.  As it stands, it is unclear if this policy change accomplishes this goal. 

Clearly, adding this policy change into and expansive piece of legislation at the last minute did not allow for the legislature to fully review and consider this proposal.  By exercising your line-item veto authority now, the legislature can take this matter up as a stand-alone bill and examine this proposal and better understand its impact on Ohio college students.

State Rep. Debbie Phillips                                                     
State Rep. Kathleen Clyde

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