SACRAMENTO – Legislation authored by Senator Janet Nguyen (R-Garden Grove) to eliminate tax liability on student loan debt for former students of Corinthian Colleges was signed into law by Governor Jerry Brown this week. SB 150 was jointly authored by Senator Bob Huff (R-San Dimas) and co-authored by Senate Republican Leader Jean Fuller (R-Bakersfield) and Senators Pat Bates (R-Laguna Niguel), Tom Berryhill (R-Twain Harte), Mike Morrell (R-Rancho Cucamonga), and Andy Vidak (R-Hanford).
“As a lifelong educator, I am a strong believer in enabling students to achieve their goals,” said Sen. Fuller. “What happened with Corinthian Colleges was unfortunate. It affected the livelihoods of hundreds of students, including many military service veterans. They will now be able to continue earning their college degrees and improving their lives without carrying the burdensome debt from this negative experience.”
“By signing SB 150 into law, Governor Brown and the California Legislature have provided much needed support to a large group of California students that were looking to improve their lives through education. I am proud to have co-authored this bill and I hope that these students will be incentivized to continue their educational careers,” said Sen. Nguyen.
“I’m pleased that the Governor chose to protect these students from being forced to pay taxes on student loan debt for an education they never received,” said Sen. Huff. “Students had no warning or control that Corinthian Colleges would suddenly declare bankruptcy and close all campuses. Both Senator Nguyen and I strongly believed they should not be penalized for seeking forgiveness of this debt so they can take advantage of new education opportunities.”
The now-defunct Corinthian Colleges was one of the largest for-profit education companies in the nation, enrolling students at its Heald, Everest and WyoTech campuses. When Corinthian went into bankruptcy and closed all of its campuses, many students were left with significant student loan debt but no degree to show for their efforts. Former students have the option of seeking a full or partial discharge of their debt, but would then be subject to state tax liability for these obligations. SB 150 removes state income tax liability on forgiven federal, state or private loan debt for students who elect to forego the credits they have earned.
“This student relief bill will aid more than 13,000 students whose educational futures were put at risk by the unexpected closure of this college system,” said Fuller.