Enacts the "New York state family tuition investment program act" to provide for the advance purchase of tuition to colleges in the state

Summary of provisions

Section 1 of the bill is a statement of legislative findings.

Section 2 establishes the new York State Family Tuition Investment Program.

This section sets forth the powers and duties of the Higher Education Services Corporation (HESC), as administrator of the program and to include, among others, the power to make rules and regulations for the implementation of the program, to engage the services of financial consultants, actuaries and auditors, and to market the program.

This section also sets out the procedure by which a purchaser would enter into a prepayment agreement with HESC for the advance payment of tuition at a SUNY or CUNY four-year school or community college, or at a private college in New York State. Prices would be equal to current tuition, plus a fee to help defray program administration costs. Prices would be readjusted on an annual basis. Costs for public and private colleges would be calculated as a weighted average of the public and private colleges within an established category.

Section 2 further establishes other terms of prepayment agreements, including the provision of a minimum period of four years between the time a prepayment agreement is entered into and the time the corporation must pay tuition, the substitution of beneficiaries under a prepayment agreement and terms under which agreements may be terminated. Additionally, it provides that ownership of credits shall not penalize purchasers or beneficiaries for eligibility of alternative financial aid.

Finally, this section sets out the procedure and criteria for establishment of a scholarship program whereby tuition credits could be donated to any scholarship program registered with the corporation.

Section 3 of this bill amends the State finance law by adding a new section 78-c, creating the New York State Family Tuition Investment Program Trust Fund, in the sole custody of the State Comptroller..

This section requires the corporation to have the actuarial soundness of the trust fund evaluated by a nationally recognized actuary, in order to assure, among other things, that process for the following year are set at an appropriate level to assure the continuing viability of the trust fund. Audited annual financial statements are also required.

Finally, this section would allow for moneys in the trust fund not required for the immediate payment of obligations of HESC under prepayment agreements to be contractually loaned to the State University of New York and the City university of New York for educational purposes as detailed within said loans. Any contracts entered into by the Comptroller under this section would provide for a repayment schedule with interest which ensure the trust fund's ability to meet its obligations under the program. The total of all amounts loaned to the State University of New York and the City University of New York would be in the same proportion as the proportion of the average state funds provided to each system during the last five years.

Justification

The prospect of prohibitively expensive and ever increasing college costs is a critical concern for the parents of young children. Many of today's college students and parents are stretching their resources through the use of a variety of loans in an effort to meet college costs. We recognize that saving for college has become both more necessary and more difficult. In response, this legislation would expand the powers of the Higher Education Services Corporation to create and administer the New York State Family Tuition Investment Program and a trust fund to provide a vehicle and an incentive for New York's families to save for the costs of higher education for their children while protecting against rising costs.

Legislative history

2011-12 S.3381; 2009 S.5359

Fiscal implications

Any initial State outlays would be repaid from the funds once the program was established.

Effective date

This bill would take effect on the first day of July next succeeding the date on which it shall have become law.