Norma Foreman Glasgow, Commissioner
Department of Education
6l Woodland Street
Hartford, CT 06105
Dear Commissioner Glasgow:
You have requested an opinion on the following questions:
l. Does legislation which changes the terms and conditions of loan forgiveness programs apply to borrowers who signed promissory notes prior to the enactment of such legislation?
2. If the answer to the first question is in the affirmative, under what circumstances may the terms of the promissory notes be changed; and
3. Which of the changes made in the l986 legislation would apply to pre-l986 borrowers; and
4. For those provisions which do apply, what is the effective date for applying the changed provisions.
The answer to the first question is no, that is, legislation which changes the terms of loan forgiveness programs does not apply to loans executed prior to the effective date of the legislation. Having answered your first question in the negative, the remaining questions have no application and we do not address them.
The loans which are the subject of this opinion are part of programs intended to encourage and to assist people to become school teachers in Connecticut. In l983 the legislature created the Teacher Incentive Loan Program (TILP) and in l984 the Academic Scholarship Loan Program (ELEET). The programs set out the terms of the loans, which are intended to help finance recipients’ college educations, and also the conditions which allow recipients to have a portion or all of their loans forgiven if recipients teach in Connecticut schools. The loan provisions have been modified several times since the original enactments. See 1984 Conn. Pub. Acts 84-376, 1986 Conn. Pub. Acts 86-l, 1987 Conn. Pub. Acts 87-416, and 1990 Conn. Pub. Acts 90-l47. The modifications make some of the loan forgiveness conditions more burdensome, add some new forgiveness options, and alter the interest determinations. It is our opinion that recipients of these loans are obligated to the terms and conditions set out in their promissory notes. Their obligations are not changed by statutory changes made after their notes were executed.
A statute will not be given a retroactive construction by which it will impose liabilities not existing prior to its passage. Massa v. Nastri, l25 Conn. l44, 2 A.2d 839 (l939). This preference for prospective application of legislation is identified as a “fundamental principle of jurisprudence;” Sutherland Stat. Const. e 4l.02 (4th Ed.); and has been the subject of earlier opinions of the Attorney General. See 23 Conn. Op. Atty. Gen. l48 (l943) and 29 Conn. Op. Atty. Gen. 93 (l955). Generally laws are to be interpreted as operating prospectively unless they contain language unequivocally embracing past transactions. A study of the legislative history of all the amendments to the original statutes reveals no suggestion that any of them were intended to have retroactive effect. Further, there is contained in the General Statutes themselves a policy against giving statutes retroactive effect. See Conn. Gen. Stat. e l-l(t), l-l(u), and 55-3, Nagle v. Wood, l78 Conn. l80, 423 A.2d 875 (l979). Gormley v. State Employees Retirement Commission, 216 Conn. 523 (l990).
The preference for the prospective application of legislation is even stronger when vested rights would be impaired or new liabilities imposed if the legislation were applied retroactively. Legislation which limits or increases statutory liability is generally held to be substantive in nature; Little v. Ives, l58 Conn. 452, 262 A.2d l74 (l969); and it is intended that statutes which affect substantive rights apply prospectively only. Hydro Air of Connecticut, Inc. v. Versa Technologies, Inc., 599 F.Supp. lll9 (D.C. Conn. l984). The amended statutes here in question change the terms of the loans as to interest rates, time for repayment, and conditions and rates of forgiveness. If the new conditions were applied to loans already executed it would impose upon the borrowers conditions to which they did not agree and of which they could not have been aware at the time they signed their promissory notes. Where a statute as amended is set out in full in the amending act, the provisions of the original act are considered to have been the law from the time of enactment, and the new provisions are the law from the time the amendments took effect. In Re Fuetl, 247 F 829 (D.C. Conn. l9l7). The fact that the amendment states that the original act is repealed does not change this principle. State v. Fahy 149 Conn. 577, A.2d 256 (1962); cert. denied in part, 371 U.S. 943, 83 Sup. Ct. 325.
The loans under consideration here are executed as promissory notes, binding the parties to conditions regarding interest, time for repayment, and forgiveness. A promissory note is a contract and basic principles of contract law apply to its making and interpretation. Hartford Federal Savings and Loan Association v. Green, 36 Conn. Sup. 506, 412 A.2d 709 (l979). See also Appliances, Inc. v. Yost, l8l Conn. 207, 435 A.2d l, appeal after remand l86 Conn. 673, 443 A.2d 486 (l980), and Guaranty Bank and Trust v. Dowling, 4 Conn. App. 376, 494 A.2d l2l6, cert. den. l97 Conn. 808, 499 A.2d 58 (l985). The fact that a promissory note is a contract gives added weight to the prospective application of legislation which affects rights under the notes. See Conn. Gen. Stat. e 55-3, Nagle v. Wood, supra at l86; Little v. Ives, l58 Conn. 452, 457, 262 A.2d l74 (l969).
Having concluded that the amendments to the loan programs here in question operate prospectively only, those amendments do not change the terms and conditions of loans signed prior to the enactment of the amendments.
Very truly yours,
CLARINE NARDI RIDDLE
Diane W. Whitney
Assistant Attorney General