Creates the Empire state college savings authority

Summary of specific provisions

Section One: This bill would add a new Title 6-A to the Public Authorities Law to establish the Empire State College Savings Authority. Such new Title would include sections 1750 to 1750-j.

More specifically, this bill would establish a new public authority, with a governing board including:

- The Chancellor of the State University of New York;

- The Comptroller of the State University of New York;

- A representative of public colleges and universities appointed by the governor and confirmed by the senate;

- A representative of private colleges and universities appointed by the governor and confirmed by the senate;

- A representative of college students appointed by the governor and confirmed by the senate;

- A representative appointed by the president pro tempore of the senate; and

- A representative appointed by the speaker of the assembly.

Such authority would be charged with establishing a College Savings prepayment program, named in honor of our Empire State.

Pursuant to the terms of this bill, children could be enrolled in the program administered by this authority, and after scheduled contributions to a managed account, would be guaranteed a tuition free four-year college education at any state university of New York or an equivalent college aid payment to be used at any other college or university.

Such annual contribution would be in the amount of one-quarter of the annual tuition for a state university of New York at the time such contribution is made. This bill would further provide that contributions shall be made for not less than twelve consecutive

years commencing when the participant is not older than five years of age, but a buy back option would be available to participants up to the age of 13 years old.

This bill would also set forth that if an annual contribution were not made on behalf of an enrolled participant, then such participant would be deemed ineligible to receive program benefits until such past contribution is purchased.

If any annual contribution required to be made under this program is not made by participant, or a contributor on behalf of a participant, then such participant, or a contributor on behalf of such participant, may purchase the past annual contribution not so made at the amount of one-quarter of the annual tuition for a state university of New York at the time such purchase of the past contribution is made.

Section 256 of Article 16 would establish the benefits for the Empire State College Saving Program. Pursuant to this Section, upon enrollment in a state university of New York a participant shall notice such college or university, in a manner determined by the chancellor, of the fact that the participant is an enrolled member in good standing" in the Empire State College Savings Program, and upon such notification, the state university of New York at which such participant is enrolled, shall send all tuition bills, assessed against such participant for the next four years, to the division of the budget whereupon the director of the division of the budget, together with the chancellor of the state university as joint trustees of the Empire State College Savings Program Account shall disburse from the account an amount equal to ninety-five percent of the tuition assessed against the participant to the university or college at which the participant is enrolled in full satisfaction of the tuition so assessed.

This section would further provide for the payment of a college aid voucher, equal to 95 percent of the annual tuition of a state university of New York, for any participant enrolled at a college or university not a part of the state university of New York.

Section 257 of Article 16 would provide that contributions made on behalf of any participant might be returned from the Empire State College Savings Program Account to the contributor, upon a signed notarized statement by the contributor, that such contributor has a physical, mental or financial disability as defined pursuant to a regulation promulgated by the division of the budget.

The return of successful contribution shall constitute only the principal of the contribution; and shall not include any interest or investment income earned by the account on such contribution. If a contribution is returned to the contributor, the director of the division of the budget shall notice the participant and the participant's legal guardian, and within sixty days of the receipt of such notification, the participant, or a different contributor on behalf of the participant, may replace the amount of the returned contribution without penalty into Empire State College Savings Program.

Section 258 of Article 16 would provide that contributions, interest on contributions, investor growth in the Empire State College Savings Program Account and program benefits shall not be deemed income to either the contributor or the participant of the Empire State College Savings Program nor shall it be deemed subject to state or local taxes.

Justification

The cost of a college education is becoming more and more a financial burden unable to be borne by a college student during their college tenure. As a result, parents or students are forced either to bear crushing financial circumstances or incur huge amounts of debt in order to obtain a college education. Worse yet, these costs continue to become even further out of reach, with the cost of the average college education doubling in the last five years of the 1990's, during a period of extremely low inflation.

This bill seeks to accomplish two goals: first to assist New Yorkers to save for their children's education, in a non-taxable, responsible, not overly burdensome manner; and, second to guarantee New Yorkers who do so participate in this program, that upon the conclusion of the payment schedule, they can obtain a four-year, debt free, high quality, completely paid for college education.

This bill would especially assist middle class families who are not eligible for other tuition assistance programs.

The mechanism established by this bill, the Empire State College Savings Program, will provide a solvent, assured, and fiscally responsible vehicle to permit all New Yorkers to achieve a college education. In the new age of information, it is especially important for our state.

Education opens the door of opportunity, and this bill will permit many more people to not only open the door, but also walk through it without an unbearable cost or debt burden that will impair their future.

Prior legislative history

2009-10: Died in Corporations, Authorities and Commissions 2008: S.1960 - Died in Corporations, Authorities and Commissions

Fiscal implications

All costs associated with the establishment and maintenance of the Empire State College Savings Program would be provided by the contributions into, and interest and investment growth of, the Empire State College Savings Program Account.

Effective date

This act shall take effect immediately, with provisions.