Establishes the study and stay program whereby a resident taxpayer, who received their bachelor's degree in this state, can set aside a portion of his or her tax payments for a down payment on a home

Summary of provisions

Section 1: Amends the tax law by adding a new section 608 establishing the Study and Stay Program. This section defines an "eligible taxpayer" as a resident taxpayer who received a bachelor's degree awarded by a college or university located in New York State after January 1, 2015, who has never had an ownership interest in a residential real property. Defines "ownership interest" as a fee simple interest, joint tenancy, tenancy in common, tenancy by entirety, interest of a tenant-shareholder in a residential cooperative, a life estate, and a land contract.

The Study and Stay Program will allow eligible taxpayers to annually deposit no more than $5,000 of his or her State Personal Income Tax liability into an account designated for such taxpayer in the program. Eligible taxpayers will be allowed to do this for a period not to exceed 10 years after receipt of a bachelor's degree. Moneys so deposited may only be withdrawn for the purpose of a down payment toward the purchase of his or her first owner-occupied residential real property.

The Department of Taxation and Finance shall provide a space on the Personal Income Tax Returns to enable taxpayers to designate moneys into the Study and Stay Program fund. No more than $10 million may be designated to this program in any tax year. Eligible taxpayers must submit proof to the Department of Taxation and Finance of receipt and the date of receipt of a bachelor's degree from a college or university located in the State.

Section 2: Amends the state finance law by adding a new section 85 establishing the Study and Stay Program Fund in the joint custody of the State Comptroller and the Commissioner of Taxation and Finance. The State Comptroller shall create a separate and distinct account for each eligible taxpayer in the Study and Stay Program. The moneys in said account must be made available within 10 days of submission by a taxpayer for their use toward a down payment on a first purchase of residential real property.

Within 60 days of receipt of moneys, the taxpayer must submit a sworn statement to the State Comptroller and the Commissioner of Taxation and Finance certifying that moneys were used toward this purpose.

Any moneys remaining in the account following disbursement to the eligible taxpayer; remaining in the account in the 11th year after receipt of a bachelor's degree; and remaining when the eligible taxpayer ceases to be a resident of New York State shall be returned to the general fund. Additionally, a penalty will be imposed for eligible taxpayers who make a down payment and cease to be a resident

of the State during a certain timeframe. These penalties may be waived due to relocation due to employment requiring residency in another state, or a severe financial hardship.

Section 3: This act shall take effect immediately.

Justification

Earning a college degree is still one of the biggest aspirations for New York's teenagers. A recent survey conducted by the Pew Research Center found that 94% of parents expect their child to attend college. This is because college is seen as the bedrock of the American middle class. A high education not only stimulates intellectual and personal growth, but allows our young adults to develop the skills necessary to begin a successful career.

Unfortunately, it is increasingly expensive to attend college. During the 2012-2013 academic year, it cost the average student $34,085 to attend a private, four-year college in New York. This made us the 10th most expensive state in the country. Likewise, the College Board found that since 2004-2005, public university costs grew by 33%.

To meet this enormous price tag, individuals are taking on greater amounts of student loans. The American Student Association reports that 60% of college students borrow annually to finance their education. In 2012, total outstanding student loan debt reached $966 billion; a level of debt second only to mortgages.

In New York, 60% of the class of 2011 graduated with such debt at an average of $26,388. This figure is equivalent to 55% of the average annual earnings of New York graduates under 30, all but guaranteeing a repayment battle for years to come. At the same time, graduate earnings are not as strong as they once were. Since 2000, earnings for 25 to 34 year-olds holding a bachelor's degree fell 15%. The combination of lower earning and a high debt load make it increasingly difficult for college students to make big purchases, which causes a drag on lifetime wealth.

One such purchase is a home. Following the Great Recession, homeownership rates among recent graduates fell by over 10%. According to the Federal Reserve Bank of New York, for the first time in at least a decade, 30-years olds without a student debt were more likely to own a home than student debtors. It is especially difficult for graduates to purchase a home in New York, which had the third highest down payment rate in the country in 2013.

A college degree should bring a lifetime of rewards, not financial struggle. That is why we propose the establishment of a Study and Stay Program. If enacted, this program will make it affordable once again for college graduates to own a New York home.

Study and Stay will allow graduates from a four-year, New York college to receive a credit of up to $5,000 from their State Income Tax for up to 10 years. When such a graduate seeks to purchase a home, they may use these funds toward the down payment of a first home. With the Study and Stay Program, we can not only allow more graduates to attain the goal of homeownership, but also renew New York as a premier destination for younger generations.

Legislative history

New Bill.

Fiscal implications

$10 million in tax expenditures when fully phased implemented.

Effective date

This act shall take effect immediately.