Bill S7791-2013

Establishes the New York student affordable refinancing for tomorrow program (New START)

Establishes the New York student affordable refinancing for tomorrow program (New START).

Details

Actions

  • Jun 12, 2014: referred to higher education
  • Jun 12, 2014: DELIVERED TO ASSEMBLY
  • Jun 12, 2014: PASSED SENATE
  • Jun 11, 2014: ORDERED TO THIRD READING CAL.1360
  • Jun 11, 2014: COMMITTEE DISCHARGED AND COMMITTED TO RULES
  • Jun 9, 2014: REFERRED TO HIGHER EDUCATION

Meetings

Calendars

Votes

VOTE: COMMITTEE VOTE: - Rules - Jun 11, 2014
Ayes (22): Skelos, Libous, Bonacic, Carlucci, Farley, Flanagan, Hannon, Larkin, LaValle, Marcellino, Maziarz, Nozzolio, Seward, Valesky, Little, Stewart-Cousins, Breslin, Dilan, Montgomery, Parker, Perkins, Gianaris
Ayes W/R (1): Krueger
Excused (2): Hassell-Thompson, Espaillat

Memo

BILL NUMBER:S7791

TITLE OF BILL: An act to amend the education law and the state finance law, in relation to establishing the New York student affordable refinancing for tomorrow program (New START)

Purpose:

The purpose of this bill is to establish the New York student affordable refinancing for tomorrow program (New Start), to authorize the state to pay a certain about of a student's education loan debt and establish a mechanism for such student to pay back the state at a low interest rate and based on such student's income.

Summary of Provisions:

Section 1. Amends Article 14 of the education law to add five new sections, 694-c-694-g, to establish the New York Student Affordable Refinancing for Tomorrow Program (New Start);

694-c- provides definitions;

694-d -Creates the New Start program;

649-e- Provides for program eligibility;

649-f- Provides for program details;

649-g - Provides for program repayment requirements.

Section 2. amends the state finance law to establish the New York State Affordable Refinancing for tomorrow fund.

Section 3. Provides for the effective date.

Justification:

This bill establishes a program to help alleviate the burden of student loan debt. Eligible students who attend SUNY or CUNY and graduate with student loan debt would be able to apply to the Higher Education Services Corporation to have the state pay the students' private loan debt in a lump sum to the lender, in an amount up to $35,000. The student would then pay back the state over time based on their annual salary and ability to pay.

Student loan debt has now surpassed credit card debt as the number one source of debt in this country. It is becoming increasingly harder for students and their families to afford a higher education. Many families and students must take out private student loans in order to attend college. Many private student loans have very high interest rates that are difficult to pay back.

This bill would relieve student debt by directly paying an eligible student's private student loan debt and establishing an affordable repayment plan, with low interest rates that would be based upon a student's yearly income.

Legislative History:

New bill

Fiscal Implications:

To be determined and pursuant to appropriation.

Effective Date:

This act shall take effect on the 120th day after it shall have become a law, provided, however, that effective immediately, the addition, amendment and/or repeal of any rule or regulation necessary for the implementation of this act on its effective date is authorized to be made an completed on or before such date.


Text

STATE OF NEW YORK ________________________________________________________________________ 7791 IN SENATE June 9, 2014 ___________
Introduced by Sen. LAVALLE -- read twice and ordered printed, and when printed to be committed to the Committee on Higher Education AN ACT to amend the education law and the state finance law, in relation to establishing the New York student affordable refinancing for tomor- row program (New START) THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Article 14 of the education law is amended by adding a new part VI to read as follows: PART VI NEW YORK STUDENT AFFORDABLE REFINANCING FOR TOMORROW PROGRAM (NEW START) SECTION 694-C. DEFINITIONS. 694-D. NEW YORK STUDENT AFFORDABLE REFINANCING FOR TOMORROW PROGRAM (NEW START) 694-E. PROGRAM ELIGIBILITY. 694-F. PROGRAM. 694-G. REPAYMENT. S 694-C. DEFINITIONS. FOR PURPOSES OF THIS PART, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS: 1. "EDUCATION LOAN" SHALL MEAN ANY STUDENT LOAN THAT THE STATE REFINANCES UNDER THE PROGRAM THAT WAS OBTAINED BY A BORROWER FOR THE PURPOSES OF ATTENDING COLLEGE AT THE STATE UNIVERSITY OF NEW YORK OR THE CITY UNIVERSITY OF NEW YORK, PROVIDED, HOWEVER, THAT LOANS PROVIDED BY THE FEDERAL GOVERNMENT, OR LOANS PROVIDED AT AN INTEREST RATE AT OR LOWER THAN THE CURRENT FEDERAL LOAN INTEREST RATE SHALL NOT BE ELIGIBLE FOR REFINANCING UNDER THE PROGRAM. 2. "PARTICIPANT" SHALL MEAN AN INDIVIDUAL WHO HAS INCURRED STUDENT LOAN DEBT FROM A LENDING INSTITUTION OR LENDER TO COVER THE COST OF TUITION AT THE STATE UNIVERSITY OF NEW YORK OR THE CITY UNIVERSITY OF NEW YORK AND HAS APPLIED TO PARTICIPATE AND BEEN ACCEPTED TO PARTICIPATE IN THE PROGRAM.
3. "LENDING INSTITUTION" OR "LENDER" SHALL MEAN ANY ENTITY THAT HAS ITSELF OR THROUGH AN AFFILIATE PROVIDED STUDENT LOANS TO AN ELIGIBLE PARTICIPANT. 4. "PROGRAM" SHALL MEAN THE NEW YORK STUDENT AFFORDABLE REFINANCING FOR TOMORROW PROGRAM (NEW START). 5. "FUND" SHALL MEAN THE NEW YORK AFFORDABLE REFINANCING FOR TOMORROW PROGRAM FUND ESTABLISHED BY SECTION NINTY-NINE-W OF THE STATE FINANCE LAW. S 694-D. NEW YORK STUDENT AFFORDABLE REFINANCING FOR TOMORROW PROGRAM (NEW START). THE NEW YORK STUDENT AFFORDABLE REFINANCING FOR TOMORROW PROGRAM (NEW START) IS HEREBY ESTABLISHED FOR THE PURPOSES OF RELIEVING STUDENT DEBT BY DIRECTLY PAYING AN ELIGIBLE PARTICIPANT'S LOAN DEBT TO THE LENDING INSTITUTION OR LENDER AND PROVIDING A REPAYMENT PLAN WHEREBY PAYMENTS WILL BE DEPOSITED IN THE FUND. 1. THE CORPORATION SHALL PROMULGATE RULES AND REGULATIONS FOR THE ADMINISTRATION OF THIS PROGRAM AND SHALL MANAGE THE FUND IN CONSULTATION WITH THE OFFICE OF THE COMPTROLLER. 2. THE CORPORATION SHALL DETERMINE ADDITIONAL REQUIREMENTS FOR ELIGI- BLE PARTICIPANTS, OTHER THAN THOSE SPECIFIED IN SECTION SIX HUNDRED NINETY-FOUR-E OF THIS PART, SHALL SET A FIXED INTEREST RATE FOR THE REPAYMENT OF REFINANCED LOANS, WHICH SHALL BE LOWER THAN THE AVERAGE MARKET RATE FOR PRIVATE STUDENT LOANS, AND SHALL ESTABLISH AN APPLICA- TION PROCESS FOR THE PROGRAM. 3. THE CORPORATION SHALL DETERMINE APPROPRIATE PAYMENT DEFERMENT AND FORBEARANCE OPTIONS FOR LOSS OF EMPLOYMENT OR EXTREME HARDSHIP. S 694-E. PROGRAM ELIGIBILITY. 1. TO BE ELIGIBLE FOR THIS PROGRAM A PARTICIPANT MUST: A. HAVE GRADUATED FROM THE STATE UNIVERSITY OF NEW YORK OR THE CITY UNIVERSITY OF NEW YORK WITHIN FOUR YEARS, OR FIVE YEARS IF ENROLLED IN A PROGRAM NORMALLY REQUIRING FIVE YEARS; B. HAVE GRADUATED WITH A GRADE POINT AVERAGE AT OR ABOVE 3.0; C. HAVE INCURRED STUDENT LOAN DEBT; D. BE GAINFULLY EMPLOYED FOR AT LEAST THREE MONTHS PRIOR TO FILING AN APPLICATION TO PARTICIPATE IN THE PROGRAM; E. AGREE TO SIGN A CONTRACT WITH THE CORPORATION TO ALLOW A DIRECT WITHDRAWAL OF PAYMENTS FROM THEIR PAY CHECKS UNTIL THE DEBT OBLIGATION IS PAID IN FULL; AND F. MUST APPLY FOR THE PROGRAM WITHIN TWO YEARS AFTER COLLEGE GRADU- ATION. S 694-F. PROGRAM. 1. THE CORPORATION SHALL MAKE LUMP SUM PAYMENTS TO LENDING INSTITUTIONS OR LENDERS TO PAY ELIGIBLE PARTICIPANTS' EDUCATION LOANS OUT OF THE FUNDS APPROPRIATED TO THE FUND FOR THE PURPOSES OF THIS PROGRAM IN AMOUNTS NOT TO EXCEED THIRTY-FIVE THOUSAND DOLLARS PER PARTICIPANT. 2. LOANS THAT THE PARTICIPANT ACQUIRED FROM THE FEDERAL GOVERNMENT OR THOSE LOANS THAT HAVE A FIXED INTEREST RATE PROVIDED AT AN INTEREST RATE AT OR LOWER THAN THE CURRENT FEDERAL LOAN INTEREST RATE SHALL NOT BE ELIGIBLE FOR ACQUISITION UNDER THE PROGRAM. S 694-G. REPAYMENT. 1. PARTICIPANTS SHALL REPAY THE TOTAL COST OF THE DEBT OBLIGATION TO THE FUND AT AN INTEREST RATE DETERMINED BY THE CORPO- RATION ACCORDING TO THE FOLLOWING: A. DURING THE FIRST FIVE YEARS OF PARTICIPATION IN THE PROGRAM, THE PARTICIPANT SHALL PAY THREE PERCENT OF THE SALARY EARNED PER YEAR DURING EACH OF THOSE YEARS;
B. DURING THE NEXT FIVE YEARS OF PARTICIPATION IN THE PROGRAM, THE PARTICIPANT SHALL PAY FIVE PERCENT OF THE SALARY EARNED PER YEAR DURING EACH OF THOSE YEARS; C. DURING THE ELEVENTH YEAR OF PARTICIPATION AND EACH YEAR THEREAFTER UNTIL THE DEBT OBLIGATION IS PAID IN FULL, THE PARTICIPANT SHALL PAY EIGHT PERCENT OF THE SALARY EARNED PER YEAR DURING EACH OF THOSE YEARS. 2. THERE SHALL BE NO PRE-PAYMENT PENALTIES UNDER THE PROGRAM AND REPAYMENT SCHEDULES MAY BE CALCULATED AT A HIGHER PERCENTAGE RATE PER YEAR OF SALARY IF THE PARTICIPANT CHOOSES OR REQUESTS A FASTER RE-PAY- MENT OPTION. S 2. The state finance law is amended by adding a new section 99-w to read as follows: S 99-W. NEW YORK STUDENT AFFORDABLE REFINANCING FOR TOMORROW PROGRAM FUND. 1. THERE IS HEREBY ESTABLISHED WITHIN THE CUSTODY OF THE NEW YORK STATE HIGHER EDUCATION SERVICES CORPORATION, IN CONSULTATION WITH THE STATE COMPTROLLER, OR HIS OR HER DESIGNEE, A FUND TO BE KNOWN AS THE NEW YORK STUDENT AFFORDABLE REFINANCING FOR TOMORROW PROGRAM FUND. 2. ALL MONIES RECEIVED PURSUANT TO THE NEW YORK STUDENT AFFORDABLE REFINANCING FOR TOMORROW PROGRAM (NEW START) SHALL BE DEPOSITED INTO THE FUND AND SHALL BE MANAGED PURSUANT TO PART SIX OF ARTICLE FOURTEEN OF THE EDUCATION LAW. 3. ALL NECESSARY RULES AND REGULATIONS FOR THE SUCCESSFUL ADMINIS- TRATION, INVESTMENT AND MANAGEMENT OF SUCH FUND SHALL BE PROMULGATED BY SUCH CORPORATION, IN CONSULTATION WITH THE STATE COMPTROLLER, OR HIS OR HER DESIGNEE. S 3. This act shall take effect on the one hundred twentieth day after it shall have become a law, provided, however, that effective immediate- ly, the addition, amendment and/or repeal of any rule or regulation necessary for the implementation of this act on its effective date is authorized to be made and completed on or before such date.

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