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UNOFFICIAL COPY 26 RS BR 1979
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AN ACT relating to the Public Service Student Loan Forgiveness Program, making 1
an appropriation therefor, and declaring an emergency. 2
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 3
SECTION 1. A NEW SECTION OF KRS CHAPTER 164 IS CREATED TO 4
READ AS FOLLOWS: 5
(1) The General Assembly hereby establishes the Ke ntucky Public Service Student 6
Loan Forgiveness Program to encourage and assist individuals in pursuing or 7
remaining in public service professions. 8
(2) As used in this section: 9
(a) "Authority" means the Kentucky Higher Education Assistance Authority; 10
(b) "Eligible student loan" means a federally guaranteed student loan under 11
the Federal Family Education Loan Program or Federal Direct Loan 12
Program; 13
(c) "Public service" means employment with the Commonwealth of Kentucky, 14
any county, city, political subdivisi on, or department, board, agency, 15
commission or authority thereof, a public school district, public university, 16
or any qualifying nonprofit organization that is exempt from taxation under 17
26 U. S. C. sec. 501(c)(3) providing direct public services; and 18
(d) "Program agreement" means a contract entered into between the authority 19
and an eligible applicant for purposes of this section. 20
(3) (a) There is hereby established a Kentucky Public Service Student Loan 21
Forgiveness Program fund in the State Treasury for t he purpose of 22
providing assistance in the repayment of eligible student loans to 23
individuals employed in a public service profession serving the citizens of 24
Kentucky. 25
(b) The fund shall be administered by the authority and shall consist of state 26
appropriations, gifts and grants from public and private sources, and 27
UNOFFICIAL COPY 26 RS BR 1979
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federal funds. 1
(c) Any unallotted or unencumbered balances in the fund shall be invested as 2
provided in KRS 42.500. Income earned from the investments shall be 3
credited to the fund. 4
(d) Notwithstanding KRS 45.229, any fund balance at the close of the fiscal 5
year shall not lapse but shall be carried forward to the next fiscal year. 6
(4) To be considered eligible for the program, an individual shall: 7
(a) Reside in the Commonwealth of Kentucky; 8
(b) Maintain full-time employment in a position of public service located in the 9
Commonwealth of Kentucky, excluding an office filled by election; 10
(c) Not be in default on any program under the Title IV of the Higher 11
Education Act of 1965, 20 U.S.C. sec. 1001 et seq., as amended, or any 12
obligation to the authority under any program administered by the 13
authority; and 14
(d) Submit an annual application that requires verification of public service 15
employment and the student loan. 16
(5) (a) Subject to the availability of funds, the authority shall award loan 17
repayment benefits to eligible applicants who are selected and who enter 18
into a program agreement. Recipients shall fulfill the requirements of the 19
agreement and comply with each of the following requirements while th e 20
program agreement is in force: 21
1. Complete a minimum service commitment of two (2) years of full -time 22
eligible public service employment; and 23
2. Satisfy employment verification requirements. 24
(b) Failure to complete the service commitment may result in re payment 25
obligations or loss of remaining years of eligibility. 26
(6) (a) The authority shall administer the Kentucky Public Service Student Loan 27
UNOFFICIAL COPY 26 RS BR 1979
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Forgiveness Program and develop award criteria to include but not be 1
limited to methods to address critical short age occupations, rural or 2
distressed counties, underserved regions, length of service commitment, and 3
income thresholds. 4
(b) Subject to the availability of funds, the authority shall disburse loan 5
repayment benefits between five thousand dollars ($5,000) a nd seven 6
thousand five hundred dollars ($7,500) to a selected program participant 7
after the completion of each twelve (12) month period of verified public 8
service employment, not to exceed a period of five (5) consecutive years; and 9
(c) The lifetime loan r epayment benefit disbursed to the program participant 10
shall not exceed a total of forty thousand dollars ($40,000), or the amount 11
of the outstanding eligible student loan balance, whichever is less. 12
(7) The authority may establish criteria for an enhanced award to include but not be 13
limited to: 14
(a) Loan repayment benefit up to ten thousand dollars ($10,000) to a program 15
participant after completion of each twelve (12) month period of eligible 16
public service employment not to exceed a period of five (5) cons ecutive 17
years; 18
(b) The total loan repayment benefit disbursed to an enhanced award program 19
participant not to exceed forty thousand dollars ($40,000), or the total loan 20
balances, whichever is less; and 21
(c) Develop selection criteria to address critical sho rtage of public service 22
professions, service to rural areas, designated distressed counties, health 23
professional shortage areas, and high-need school districts. 24
(8) The authority shall administer the Kentucky Public Service Student Loan 25
Forgiveness Program and shall promulgate administrative regulations in 26
accordance with KRS Chapter 13A for the administration of the program. 27
UNOFFICIAL COPY 26 RS BR 1979
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(9) (a) By November 1 of each year in which the Kentucky Public Service Student 1
Loan Forgiveness Program fund has a balance, the aut hority shall report to 2
the Legislative Research Commission for referral to the Interim Joint 3
Committee on Appropriations and Revenue: 4
1. The total number of eligible participants and loan repayment benefit 5
participants; 6
2. The total number and type of occupations participating in the 7
program; 8
3. The geographic distribution of loan repayment benefit recipients; 9
4. Retention rates; and 10
5. Total funds disbursed. 11
(b) The annual report shall provide an analysis and evaluation of the program 12
as it relates to workforce retention, regional equity, the cost per retained 13
public servant, and the return on investment relative to workforce vacancy 14
rates. 15
Section 2. There is hereby appropriated General Fund moneys in the amount of 16
$30,000,000 in fiscal year 2026 -2027 from the budget reserve trust fund account 17
established by KRS 48.705 to the Kentucky Public Service Student Loan Forgiveness 18
Program fund to provide assistance in the repayment of eligible s tudent loans for public 19
service employees of the Commonwealth. 20
Section 3. There is hereby appropriated general fund moneys in the amount of 21
$30,000,000 in fiscal year 2027 -2028 to the Kentucky Public Service Student Loan 22
Forgiveness Program fund to provide assistance in the repayment of eligible student loans 23
for public service employees of the Commonwealth. 24
Section 4. Whereas public service employees provide vital roles in the delivery 25
of critical and essential services in the Commonwealth, an emergency is declared to exist, 26
and this Act takes effect July 1, 2026. 27