What's happening
This bill establishes a New York State program to consolidate and refinance student loans at lower interest rates for eligible borrowers.
Why it matters
Creates a state-backed refinancing option. By authorizing up to $500 million in bonds (with the possibility of more if necessary), the program leverages New York's borrowing power to offer students and graduates a public alternative to private refinancing, potentially making repayment more manageable.
Caps interest rates for refinanced loans. The program sets a maximum interest rate of 5.5% for consolidated loans, which could significantly lower monthly payments and total repayment amounts for borrowers currently paying higher rates, making student debt less burdensome.
Incorporates borrower protections in hardship. If a borrower falls behind on payments, the program requires a review of their financial circumstances and allows for payment modifications in cases of genuine hardship, reducing the risk of default and severe financial consequences.
Demands transparency and equity monitoring. Annual public reporting is required on loan volume, rates, and borrower demographics (including race, gender, and ethnicity), which can help policymakers and the public assess whether the program is reaching those most in need and ensure equitable access to its benefits.
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Who cares
Headline styles
Refinance Student Loan Debt
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to higher education
- Referred to higher education
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Lower Student Loan Interest
In Assembly Committee · Higher Education · Sponsor Marcos Crespo
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
4625
2017-2018 Regular Sessions
IN SENATE
February 23, 2017
Introduced by Sen. HAMILTON -- read twice and ordered printed, and when printed to be committed to the Committee on Higher Education
AN ACT to amend the education law, in relation to establishing the New York state higher education debt consolidation and refinancing program
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Article 14 of the education law is amended by adding a new part VI to read as follows:
PART VI
NEW YORK STATE HIGHER EDUCATION DEBT CONSOLIDATION AND
REFINANCING PROGRAM Section 694-j. New York state higher education debt consolidation and
refinancing program.
§ 694-j. New York state higher education debt consolidation and refinancing program. 1. The corporation shall have the authority to issue up to five hundred million dollars in bonds, to consolidate and refinance the education loans of eligible borrowers at a lower interest rate, provided, however if the corporation determines it needs to issue more than five hundred million dollars in bonds to operate the program effectively, the corporation shall make the determination by January fifteen of the year subsequent to when the program goes into effect.
2. The corporation shall consolidate and refinance the education loans of eligible borrowers and interest shall accrue upon all student loan payments made by eligible borrowers to the corporation at a rate per annum that is equal to or less than 5.5%. Interest shall accrue from the time the eligible borrower commences repayment under this section, and shall accrue only during the period over which the eligible borrower is required to make such repayment.
3. Should an eligible borrower fail to pay to the division any amounts owed under this section within thirty days of the due date, the corporation shall review the eligible borrower's financial circumstances in
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08267-01-7
S. 4625 2
order to determine whether the delinquency is a result of a change in the eligible borrower's financial circumstances. If such a determination is made, the corporation may modify the eligible borrower's required payments. If failure to pay is not determined to be due to a material deterioration in the eligible borrower's financial circumstances, the corporation shall terminate and take any legal action necessary to enforce the terms of the loan.
4. The program's operating and administrative costs shall be covered by the fees charged to apply for the refinancing and the interest rate surcharge.
5. The corporation shall submit an annual report on the program to the governor and the legislature and the report shall be published on the corporation's website. The report shall include but not be limited to the following:
(a) The amount of bonds floated to cover the student debt refinancing;
(b) The number of loans refinanced;
(c) The breakdown of the refinancing rates charged to refinance;
(d) The gender, race and ethnicity of the person refinancing;
(e) The total debt load refinanced by each racial or ethnic group; and
(f) The total administrative costs for operating the refinancing program and the projected total refinancing costs incurred till debt is paid for each racial and ethnic group.
6. The corporation is authorized to promulgate rules and regulations necessary for the implementation of the provisions of this section.
7. Under this section "eligible borrower" and "education loan" shall mean as defined under section six hundred ninety of this article.
§ 2. This act shall take effect on the one hundred twentieth day after it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the education law, in relation to establishing the New York state higher education debt consolidation and refinancing program
Purpose or general idea of the bill
This bill would establish the New York State higher education debt consolidation and refinancing program (HEDCORP)
Summary of specific provisions
Sect 1. Entails that Article 14 of the education law is amended by adding Part VII-r-which establishes the following:
Read the full memo (872 words)
Section 694-j. A New York State Higher Education Debt Consolidation Program this program will:
1. This corporation will have the authority to issue up to five hundred million dollars in bonds to consolidate and refinance the education loans of eligible borrowers. If more than five hundred million dollars in bonds are necessary to operate, the program the corporation will determine this the year subsequent to when the program goes into effect.
2. The corporation shall consolidate and refinance the education loans and interest rates placed upon all student loan payments made to the corporation at an annual rate equal to or less than 5.5 %.
3. If an eligible borrower fails to pay the division of amounts within thirty days of the due date, the corporation shall review the borrower's financial circumstances determining whether the default of payment was due to a change in the borrower's financial circumstances. The corporation may then modify the borrowers required payments. If failure to pay is determined by a material deterioration of the borrower, the corporation shall terminate and take any legal action necessary to enforce the loan.
4. The programs operating and administering costs shall be covered by the fees charged to apply for refinancing and interest rate surcharge.
5. The corporation shall submit an annual report to the governor as well as being published on their website with the following: amount of bonds floated to cover student debt; number of loans refinanced; breakdown of the refinancing rates charged to refinance; the gender, race and ethnicity of the person refinancing; total debt refinanced by each racial and ethnic group.
6. The corporation may promulgate rules and regulations necessary for the implementation of these provisions.
7. Eligible borrower and education loan shall be defines under section six hundred ninety of this article.
Justification
College students in New York and throughout the United States are sent out into the world upon graduating from colleges and universities with an immense financial burden. Currently, college debt is larger than all consumer debt and stands at an astronomical $1.2 trillion.
This bill would establish the New York State higher education debt consolidation and refinancing program (HEDCORP)
HEDOOR stands for "Higher Education Debt Consolidation and Refinancing Program." It is directed towards helping the hundreds of thousands of college students in New York State struggling to repay college loans while juggling their future in the other hand. It is a legislative proposal that if enacted into law will help New York residents refinance their college debts to lower interest rates and make bring their loan payments to affordable levels.
Over the past few years, New York State has put forward new resources to help students pay for college and there are options available to consolidate loans. However, these are small in scale considering the needs of the 1.2 million New Yorkers enrolled in colleges each year. At current enrollment, over 101,000 New Yorkers will borrow more than $40,000 and over 500,000 students will borrow more than $13, 000.
This debt accumulated over the years for students is hindering to their future personal financial security as well as negatively affecting the state's overall economy as income that can go to stimulate economic activity is absorbed by banks in other states holding NYS student's debt. To address the college debt crisis, this legislation will utilize the existing bureaucratic structures of our state to fully assist those impacted by this problem.
This bill authorizes the NYS Higher Education Services Corporation to issue bonds and begin the process to help New York residents consolidate and refinance their college debts to lower interest rates and bring their loan payments to affordable levels. Through this refinancing program interest rates could be as low as 5.5% or lower, compared to different loan programs being offered and which now have interest rates ranging from 6 to 12%.
In 2008 the average student debt was $24,842 In 2015, that number has grown to $36,000 on average Nationally up to 1 million borrowers are defaulting on their student loans. Black and Latino students have the highest rates of delinquent payment and default rates. This is due to the fact that the job market has traditionally not been very welcoming to then and this has been worsened by the tough economic tines facing our country and labor market. This legislation addresses such issues in a manner, which five other states have already opted for in the absence of federal leadership on this issue.
Prior legislative history
Assembly Bill 13606 of 2016. Died in Higher Education Committee
Fiscal implications for state and local government
None to Local Governments and to State Government. HESC will issue Bonds
Effective date
Shall take effect on the one hundred twentieth day after it shall become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.