Enacts the "pay it forward, pay it back program"

Summary of provisions

Section 1. This Act shall be known and may be cited as the "Pay it Forward, Pay it Back Program".

Section 2. Requires the Board of Trustees of the State University of New York to identify two 4-year institutions of the State University and two community colleges where the "Pay it Forward, Pay it Back Program" shall be implemented. The Program will permit any student who has been admitted to certain state-operated institutions of the State University to attend without the payment of tuition if such student fulfills the requirements set forth in this act: (a) New York State resident for a period of one year prior to application; (b) Student must sign a contract to pay the institution a certain percentage of the student's annual adjusted gross income for a set amount of years; (c) Student must complete their degree program within a minimum period of time to be set by the trustees which shall be no less then two years and no more than four years; (d) failure to fulfill any requirement set forth in this act will result in the conversion from the "Pay it Forward, Pay it Back Program" to a student loan for the full amount of the tuition which would have otherwise been paid; (e) Students electing to participate in this program shall be required to apply for federal Pell grant funding and tuition assistance funding. Funds awarded under these financial aid programs will not be included in the payback amount under the "Pay it Forward, Pay it Back Program"; (f) Students are responsible for all other costs including, housing, fees and other non-tuition related charges.

Section 3. The Board of Trustees of the State University of New York shall establish an immediate funding source for the "Pay it Forward, Pay it Back Program" and also a revolving fund to deposit payments made under the "Pay it Forward, Pay it Back Program".

Section 4. Effective Date

Justification

Higher education is the key to success in an increasingly competitive global economy, yet it is becoming more and more unaffordable for the middle class. The only type of household debt that grew during the recession is student loan debt. Student loan debt in America exceeds $1 trillion. Americans owe more on student loans than credit cards. That $1 trillion debt amounts to an aggregate wealth loss of about $4 trillion over the lifetime of the borrowers. The average student loan debt for a family headed by two people with 4-year degrees is $53,000.

Young Americans are starting adult life deeper in debt. The number of students in default continues to increase. This legislation can help create an alternative model for funding higher education where students can get their education, contribute to the economy, not be saddled with crushing debt, and help the next generation of students to get their education.

Legislative history

New Legislation, 2014.

Fiscal implications

To be determined.

Effective date

This act shall take effect on the first day of July next succeeding the date on which 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 are authorized and directed to be made and completed on or before such effective date.