NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1244 Revised 01/09/25
SPONSOR: Simon TITLE OF BILL:
An act to amend the education law, in relation to establishing the New
York state higher education debt consolidation and refinancing program
PURPOSE OR GENERAL IDEA OF THE BILL:
This bill would establish the New York State higher education debt
consolidation and refinancing program.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1. Amends Article 14 of the education law by adding a new. Part
6 as follows:
Section 694-j. A New York State Higher Education Debt Consolidation
Program this program will:
1. This corporation will have the authority to issue up to five hundred
million dollars in bonds to consolidate and refinance the education
loans of eligible borrowers. If more than five hundred million dollars
in bonds are necessary to operate, the program the corporation will
determine this the year subsequent to when the program goes into effect.
2. The corporation shall consolidate and refinance the education loans
and interest rates placed upon all student loan payments made to the
corporation at an annual rate equal to or less than 5.5%.
3. If an eligible borrower fails to pay the division of amounts within
thirty days of the due date, the corporation shall review the borrower's
financial circumstances determining whether the default of payment was
due to a change in the borrower's financial circumstances. The corpo-
ration may then modify the borrowers required payments. If failure to
pay is determined by a material deterioration of the borrower, the
corporation shall terminate and take any legal action necessary to
enforce the loan.
4. The programs operating and administering costs shall be covered by
the fees charged to apply for refinancing and interest rate surcharge.
5. The corporation shall submit an annual report to the governor as well
as being published on their website with the following: amount of bonds
floated to cover student debt; number of loans refinanced; breakdown of
the refinancing rates charged to refinance, the gender, race and ethnic-
ity of the person refinancing; total debt refinanced by each racial and
ethnic group.
6. The corporation may promulgate rules and regulations necessary for
the implementation of these provisions.
7. Eligible borrower and education loan shall be as defined under
section six hundred ninety of this article.
JUSTIFICATION:
College students in New York and throughout the United States are sent
out into the world upon graduating from colleges and universities with
an immense financial burden. This bill would establish the New York
State higher education debt consolidation and refinancing program
(HEDCORP).
HEDCORP stands for "Higher Education. Debt Consolidation and Refinancing
Program." It is directed towards helping the hundreds of thousands of
college students in New York State struggling to repay college loans
while juggling their future in the other hand. If enacted into law, this
will help New York residents refinance their college debts to lower
interest rates and make bring their loan payments to affordable levels.
Over the past few years, New York State has put forward new resources to
help students pay for college and there are options available to consol-
idate loans. However, these are small in scale considering the needs of
the 1.2 million New Yorkers enrolled in colleges each year. This debt
accumulated over the years for students is hindering to their future
personal financial security as well as negatively affecting the state's
overall economy as income that can go to stimulate economic activity is
absorbed by banks in other states holding NYS student's debt. To address
the college debt crisis, this legislation will utilize the existing
bureaucratic structures of our state to fully assist those impacted by
this problem.
This bill authorizes the NYS Higher Education Services Corporation to
issue bonds and begin the process to help New York residents consolidate
and refinance their college debts to lower interest rates and bring
their loan payments to affordable levels. Through this refinancing
program interest rates could be as low as 5.5% or lower, compared to
different loan programs being offered, and which now have interest rates
ranging from 6 to 12%.
PRIOR LEGISLATIVE HISTORY:
2023-24: A2315 Simon -referred to higher education
2021-22 A7812 Simon -referred to higher education
2019-20 - S 2990 - died in Higher Education Committee
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENT:
None to Local Governments and to State Government. HESC will issue
Bonds.
EFFECTIVE DATE:
Shall take effect on the one hundred twentieth day after it shall become
a law.
