Creates the New York state tuition savings program and the New York state pre-pay tuition fund and reduces distributions from the New York state pre-pay tuition savings program from adjusted gross income

Section 2. Amends the state finance law to add a new section 99-y to establish the New York State pre-pay tuition fund within the custody of the State Comptroller in consultation with the SUNY and CUNY chancellors.

Section 3. Amends paragraph 33 of subsection (c) of section 612 of the tax law, to authorize payments to be taxed at the time money is distributed into the fund and not upon withdrawal.

Section 4. Clarifies that nothing in this bill shall be construed to guarantee acceptance into any New York State College.

Section 5. Sets forth the effective date.

Justification

This bill would establish the New York State pre-pay tuition savings program to allow participants to enroll an eligible child into the program for the purposes of making payments over time to cover the cost of college tuition. The cost would be calculated based on the yearly average system-wide cost at the State University of New York including tuition, room and board and all applicable fees. An eligible child may be enrolled at age five or six and 1/3 of the yearly total cost of education would be deposited into a fund held in the custody of the State Comptroller in consultation with the SUNY and CUNY chancellors. Payments would be make over the course of 12 years. If a participant enrolls a child at age seven or thereafter, yearly payments shall be determined by the SUNY Chancellor based upon a formula that considers the child's age the time of enrollment and evenly divides the yearly average total cost of a four year SUNY education but ensure that the last payment would be made when the eligible child graduates from high school.

Payments deposited into the fund would not be eligible for withdrawal until the child reaches the age of high school graduation. However, upon that time, a participant may withdrawal the entire amount or have payments made to SUNY or CUNY if such a child is accepted into a state school. If the child chooses to go to private school, a participant may choose to have the funds applied to the cost of education at such private school.

With costs of higher education increasing and the amount of student loan debt accumulated during the course of a college education growing at an alarming rate, this bill would help families afford college by allowing them to put money aside little by little so that when their children reach the age of high school graduation, the cost of a college education at SUNY would be covered. This bill will allow participants to pay a lower cost over all because at the time payments are made, presumably, tuition will be lower than it will be when the child graduates from high school. Additionally, this program will enable students to graduate college without the crushing debt facing most young adults upon graduation.

Legislative history

2013-14 S.4593; 2012 part D of the college affordability package, S.7449A

Fiscal implications

None. Participants' contributions would cover the cost of the program.

Effective date

This act shall take effect one year after it shall have become law; provided, however, that effective immediately the New York State Comptroller or his or her designee, in consultation with the Chancellor of the State University of New York or his or her designee and the Chancellor of the City University of New York or his or her designee, shall promulgate all necessary rules and regulations for the timely implementation of this at on or before such effective date.