OHIO LEGISLATIVE SERVICE COMMISSION
Office of Research Legislative Budget
www.lsc.ohio.gov and Drafting Office
H.B. 514 Bill Analysis
134th General Assembly
Click here for H.B. 514’s Fiscal Note
Version: As Reported by House Higher Education and Career Readiness
Primary Sponsors: Reps. Cross and Denson
Effective Date:
Zachary P. Bowerman, Attorney
Mike Niemi, Research Analyst
SUMMARY
Higher education financial aid
OCOG supplemental grants
Requires the Chancellor of Higher Education to award supplemental grants to students
who are eligible for an Ohio College Opportunity Grant (OCOG) and who meet other
prescribed criteria.
Choose Ohio First loan subprogram
Requires the Chancellor to establish a Choose Ohio First subprogram to make forgivable
loans to eligible students.
Specifies a student participating in the subprogram must receive a first-time loan of
$10,000, but permits the student to apply for additional loans of $5,000 for each of the
three subsequent academic years.
Requires the Chancellor to forgive a participating student’s outstanding loans under the
subprogram if, after graduating, the student is an Ohio resident, as follows:
One year after graduating, 33% of any outstanding loans;
Two years after graduating, 50% of any outstanding loans; and
Three years after graduating, any remaining outstanding loans.
Review of residency rules
Requires the Chancellor to review and update the rules for determining whether a
student qualifies for in-state tuition to make it easier for a nonresident student to
establish Ohio residency.
May 19, 2022
Office of Research and Drafting LSC Legislative Budget Office
Income tax deduction for recent graduates
Authorizes a graduate from an Ohio institution of higher education to claim an income
tax deduction for up to three years on certain post-graduation income.
Intern hiring tax credit
Authorizes a refundable income or commercial activity tax credit equal to 30% of the
compensation paid by an employer to a student intern.
Governor’s Executive Workforce Board
Requires the Governor to appoint a Department of Higher Education employee to the
Governor’s Executive Workforce Board.
Appropriation
Makes an appropriation for the OCOG supplemental grants.
DETAILED ANALYSIS
Higher education financial aid
Supplemental Ohio College Opportunity Grants
The bill requires the Chancellor of Higher Education to award eligible students with a
supplemental grant in addition to a grant awarded under the Ohio College Opportunity Grant
Program (OCOG). The supplemental grant must equal one-half of the amount a student is
awarded under OCOG. Supplemental grants are also subject to the same requirements as
OCOG awards under continuing law, including the prohibition against a grant exceeding the
total state cost of attendance or being made to a student in a religious course of study that
does not lead to an accredited undergraduate degree.
To qualify for a supplemental grant, a student must:
1. Be eligible for OCOG;
2. Be making progress toward completing the student’s bachelor’s degree program; and
3. Have previously completed an associate’s degree program at:
a. A community college;
b. A state community college;
c. A technical college;
d. A university branch campus;
e. Central State University;
f. Shawnee State University; or
P a g e |2 H.B. 514
As Reported by House Higher Education & Career Readiness
Office of Research and Drafting LSC Legislative Budget Office
g. A private, nonprofit college or university that is not the institution at which the
student is enrolled in a bachelor’s degree program.1
Background – Ohio College Opportunity Grants
OCOG is the state’s sole need-based financial aid program for higher education
students. Continuing law qualifies Ohio residents pursuing undergraduate or nursing degrees in
Ohio for OCOG if they have an expected family contribution of $2,190 or less and a maximum
household income of $96,000. Students also must be enrolled in a state institution of higher
education, a private, nonprofit college or university, or a private, for-profit career college.2
For more information about OCOG, please review LSC’s Members Brief Ohio College
Opportunity Grant: Q&A (PDF), which may be accessed at lsc.ohio.gov.
Choose Ohio First forgivable loan subprogram
Operation
The bill requires the Chancellor to establish and administer a subprogram to the Choose
Ohio First Scholarship Program to make forgivable loans to eligible students. Eligible students
must apply for loans in a form and manner prescribed by the Chancellor. The Chancellor cannot
approve more than 100 applications for a first-time loan in an academic year. The Chancellor
must determine a method to select which applications to approve if more than 100 applications
are submitted.
For each student approved to participate in the subprogram, the Chancellor must make
a first-time loan of $10,000. A participating student may apply to receive an additional loan of
$5,000 for each of the three subsequent academic years. The Chancellor is expressly prohibited
from making loans to a student for more than four academic years. Each student who receives
a loan must sign a promissory note payable to the state. The Chancellor must determine the
interest rate and period of repayment under the note.
The bill requires the Chancellor to adopt rules in accordance with the Administrative
Procedure Act to administer the subprogram. It also states the General Assembly’s intent that
general revenue fund appropriations used to award Choose Ohio First scholarships must be
used to award subprogram loans.3
Eligibility
To be eligible to receive loans under the subprogram, a student must:
1. Be a resident of Ohio or another state;
1 R.C. 3333.126.
2 See R.C. 3333.122, not in the bill, and Ohio Administrative Code 3333-1-09.1.
3 R.C. 3333.611(B), (C), (D), (F), and (G).
P a g e |3 H.B. 514
As Reported by House Higher Education & Career Readiness
Office of Research and Drafting LSC Legislative Budget Office
2. Be enrolled at a state university, the Northeast Ohio Medical University, or a nonpublic
four-year college or university;
3. Be enrolled as an undergraduate or graduate student in a STEM or STEM education
field; and
4. Have been ranked in the top 5% of the student’s high school graduation cohort
according to grade point average.4
Loan forgiveness
The bill requires the Chancellor to forgive a participating student’s obligation to repay
loans received under the subprogram, if that student resides in Ohio after graduation, as
follows:
1. If an Ohio resident one year after graduating, 33% of the graduate’s outstanding
principal and interest;
2. If an Ohio resident two years after graduating, 50% of the graduate’s outstanding
principal and interest;
3. If an Ohio resident three years after graduating, any remaining outstanding principal or
interest.
In addition to meeting the residency requirements, a student also must do the following
to qualify for loan forgiveness:
1. Have graduated from the institution in which the graduate was enrolled while
participating in the subprogram;
2. Have outstanding loans under the subprogram; and
3. Be making timely payments on those loans in accordance with the terms of the
graduate’s repayment schedule.5
Background – Choose Ohio First Scholarship Program
Under continuing law, the Choose Ohio First Scholarship Program provides scholarships
to students pursuing STEM or STEM education degrees at an Ohio institution of higher
education. Specifically, the Chancellor awards funds to institutions selected through a
competitive grant process based on their STEM recruitment and retention plans. Recipient
institutions then distribute scholarships to students.6
4 R.C. 3333.611(A)(1).
5 R.C. 3333.611(A)(2) and (E).
6 See R.C. 3333.60 to 3333.69, none in the bill.
P a g e |4 H.B. 514
As Reported by House Higher Education & Career Readiness
Office of Research and Drafting LSC Legislative Budget Office
Review and update of rules regarding Ohio residency
The bill requires the Chancellor to review the Chancellor’s rules for determining whether
an individual enrolled at a state institution of higher education qualifies as an Ohio resident for
in-state tuition purposes. In conducting that review, the Chancellor must determine how to
streamline and improve the rules to make it easier for a nonresident student to establish Ohio
residency. Based on the review, the Chancellor must update the rules.7
Generally, continuing law requires the Chancellor’s rules for determining Ohio residency
to deny residency status to any individual living in Ohio primarily to attend a state institution. 8
For more information regarding the Chancellor’s rules, please review LSC’s Members
Brief Ohio Residency and Higher Education (PDF), which also may be accessed at lsc.ohio.gov.
Income tax deduction for recent graduates
The bill authorizes a personal income tax deduction for up to three years of certain post-
graduation income earned by an individual who graduates from an institution of higher
education in Ohio with a bachelor’s degree or a more advanced degree on or after January 1,
2023. A qualifying graduate may deduct the graduate’s employee compensation and self-
employment earnings; however, if those earnings are eligible for continuing law’s business
income deduction, the graduate must deduct them under that deduction before taking the bill’s
deduction.9
A graduate must begin claiming the three-year deduction for either the taxable year
that includes the graduation date or the following year; the graduate forfeits the deduction if it
is not claimed in one of those two taxable years. After the initial year, the graduate may
continue claiming the deduction for the next two years. Overall, a graduate may only claim the
deduction for a total of three taxable years, regardless of the number of degrees the graduate
obtains that may qualify for the deduction.10
A graduate may defer claiming the deduction for any taxable year during which the
graduate is enrolled full time in an Ohio institution of higher education to pursue a more
advanced degree.11
Qualifying degrees and institutions
To qualify for the bill’s deduction, the graduate must obtain a bachelor’s degree or “a
more advanced degree.” The bill requires the Department of Higher Education to adopt rules to
specify what advanced degrees would qualify for the deduction. A graduate, while not required
7 Section 3.
8 See R.C. 3333.31, not in the bill.
9 R.C. 5747.01(A)(36) and 5747.82(B)(1).
10 R.C. 5747.82(B)(2).
11 R.C. 5747.82(C).
P a g e |5 H.B. 514
As Reported by House Higher Education & Career Readiness
Office of Research and Drafting LSC Legislative Budget Office
to submit evidence of graduation with the graduate’s tax return, is required to retain such
evidence for inspection by the Tax Commissioner until four years after the last year the
graduate claims the deduction. If the graduate defers the deduction because the graduate is
enrolled in a more advanced degree program, evidence of this enrollment must similarly be
retained.12
A graduate qualifies for the deduction only if the graduate obtains a qualifying degree
from a public or accredited private Ohio college or university, a private career school
authorized by the State Board of Career Colleges and Schools, or certain other private
institutions accredited before 2002 and operated by for-profit corporations.13 The Department
of Higher Education is required to identify these qualifying institutions and certify a list of them
to the Tax Commissioner.14
Intern hiring tax credit
The bill authorizes a refundable tax credit against the income tax or commercial activity
tax (CAT) equal to 30% of the wages and salaries paid by an employer to a student intern on or
after January 1, 2023.15 Qualifying student interns are those who participate in an internship
program or a cooperative education program in conjunction with an in-state or out-of-state
college or university.16
To obtain the credit, an employer must apply to the Chancellor of Higher Education
between January 1 and January 21 on the basis of compensation paid to interns in the
preceding calendar year. If the employer qualifies for the credit, the Chancellor must issue the
employer a tax credit certificate within 15 days after receiving the completed application.17 The
Chancellor may obtain from the Tax Commissioner any information that is necessary to verify
that the employer qualifies for the tax credit, even if that information would generally be
confidential under existing tax information disclosure prohibitions.18
The employer must file the tax credit certificate with the employer’s next tax return to
claim the credit against either the income tax or CAT, but not both. The Commissioner may
request supporting documentation from the employer as necessary to verify credit eligibility.19
12 R.C. 5747.82(B), (C), and (D).
13 R.C. 5747.82(A).
14 R.C. 5747.82(D).
15 R.C. 3333.612; Section 4.
16 R.C. 3333.71, not in the bill.
17 R.C. 3333.612.
18 R.C. 5703.21.
19 R.C. 5747.83, 5751.55, 5747.98, and 5751.98.
P a g e |6 H.B. 514
As Reported by House Higher Education & Career Readiness
Office of Research and Drafting LSC Legislative Budget Office
Governor’s Executive Workforce Board
The bill requires the Governor to appoint an employee of the Department of Higher
Education to the Governor’s Executive Workforce Board.20
The federal Workforce Innovation and Opportunity Act (WIOA) requires the Governor to
establish a state workforce development board to carry out prescribed functions. WIOA also
prescribes specific requirements for the board’s composition, but it permits the Governor to
appoint state agency officials responsible for education programs to it.21
According to the website of the Governor’s Executive Workforce Board, the Chancellor
is currently a member of the Board.22
HISTORY
Action Date
Introduced 12-14-21
Reported, H. Higher Education & Career Readiness 05-18-22
ANHB0514RH-134/ec
20 R.C. 6301.04(A)(5).
21 See 29 United States Code 3111(b)(1)(C)(iii)(II)(dd), not in the bill.
22The list of Board Members on the Office of Workforce Transformation’s website includes Chancellor
Randy Gardner. The list also may be accessed at https://workforce.ohio.gov/home.
P a g e |7 H.B. 514
As Reported by House Higher Education & Career Readiness
Statutes affected: As Introduced: 5703.21, 5747.01, 5747.98, 5751.98, 6301.04
As Reported By House Committee: 5703.21, 5747.01, 5747.98, 5751.98, 6301.04
As Re-referred to House Committee: 5703.21, 5747.01, 5747.98, 5751.98, 6301.04