Sources of Revenue:

General Fund

Legislation creates:

A New Program

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    Senate Bill No. 142, if approved, would provide for low cost loans at a rate of interest of 2% to WV high school students with a Ac@ average or better who will be attending a college or university in WV in an amount not to exceed $2,500 per year, for a period of up to five years while obtaining an undergraduate degree. Upon graduating, the loan would be forgiven at a rate of 20% of the balance for each full year the graduate remains in West Virginia.
    The proposed legislation provides financial institutions with low cost deposits from the Investment Management Board. The financial institutions in turn would provide the 2% loans to the students. The proposed legislation places a $30 million cap on the total allowed on deposit at any one time. Based on current enrollment, graduation and retention rates, and student loan activity, it is not unreasonable to believe that full funding of the proposed WV Dollars for Scholars Loan Program could easily utilize the entire $30 million.
    Based upon an even distribution of the loan amounts, and once the program is fully phased in, it is estimated that the annual costs of debt forgiveness would be approximately $5.5 million.
    In addition to the debt forgiveness above, there would also be a cost to the State of West Virginia in the form of lost interest revenue, which based on an estimated forgone interest rate of 4%, would equal $1.2 million per year.
    Considering the large number of students which may take advantage of this loan program, and the administrative burden with monitoring compliance and residency status, it is estimated that administrative costs would be approximately $200,000.

Fiscal Note Detail

Effect of Proposal Fiscal Year
Fiscal Year
(Upon Full
1. Estmated Total Cost 0 150,000 5,744,000
Personal Services 0 100,000 125,000
Current Expenses 0 50,000 75,000
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 5,544,000
2. Estimated Total Revenues 0 -81,100 -1,200,000

Explanation of above estimates (including long-range effect):

    This analysis assumes that only newly graduating high school seniors are eligible for the program, and that the loan program is evenly phased-in over a period in excess of five years. Loan forgiveness would not begin until after graduation, thus the maximum debt forgiveness does not reach the $5.5 million indicated until year 9.
    Personal Services and Current Expenses represent estimated incremental program administration costs at the institutions.
    The loss of revenue reflects the foregone income to the State of West Virginia due to the deposits with financial institutions to support the program.


    Clarification may be needed on the wording of the liability for the debt forgiveness provisions.

    Person submitting Fiscal Note: Patricia W. Hunt
    Email Address: