What's happening
This bill creates a program for New York residents to refinance undergraduate student loans through the state, with set interest rate caps and a $100 million appropriation.
Why it matters
Targets relief to NY residents with significant undergraduate debt. Only those who have graduated from college in New York and still owe at least $10,000 in student loans are eligible—meaning the program is focused on helping local graduates with substantial remaining balances.
Includes both federal and private loans. By allowing borrowers to refinance a mix of federal and private loans, this program can potentially help those who may not be able to access federal loan forgiveness but still face burdensome private debt.
Sets clear, capped interest rates with flexible terms. The law establishes maximum interest rates for 5-, 10-, and 15-year repayment options, providing borrowers with certainty and potentially lower payments than private refinancing options, especially for those with weaker credit.
Creates a state-backed refinance option, not just private-market solutions. By establishing a state-run program (through the Higher Education Services Corporation) and appropriating $100 million, the bill leverages state resources to give borrowers an alternative to the often less favorable terms available in the private market.
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Who cares
Headline styles
Refinance Student Loan Debt
Plain English, a few words. Used as the page title.
Sponsors
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History
- Referred to finance
- Referred to finance
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2887
2019-2020 Regular Sessions
IN SENATE
January 30, 2019
Introduced by Sen. SALAZAR -- read twice and ordered printed, and when printed to be committed to the Committee on Finance
AN ACT to amend the education law, in relation to refinancing undergraduate student loans; and making an appropriation therefor
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The education law is amended by adding a new section 683-c to read as follows:
§ 683-c. Refinance of undergraduate student loans. 1. Definitions. As used in this section, the following terms shall have the following meanings: (a) "Eligible borrower" shall mean an individual who has signed or co-signed a loan for undergraduate education.
(b) "Corporation" shall be known as the higher education services corporation.
(c) "Degree" shall mean the granting of a post-secondary degree or diploma from a college or university.
(d) "Undergraduate student loans" shall mean any combination of federal and private loans used for the purpose of an eligible borrower's undergraduate education.
2. Refinance of undergraduate student loans program. An eligible borrower shall apply to have their undergraduate education loans refinanced by the corporation. The maximum amount allowed per refinanced loan shall be seventy thousand dollars.
3. Eligibility. An eligible borrower shall include a New York state resident who can provide proof to the corporation that they have graduated from a college or university with an undergraduate degree and has at least ten thousand dollars in outstanding student loan debt relating to such degree.
4. Repayment terms. Repayment terms shall be determined based on the credit rating of the eligible borrower, the amount being refinanced, and whether there is a co-signer to such loan. An eligible borrower shall
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08917-01-9
S. 2887 2
choose either (a) variable repayment or (b) fixed repayment. The options for fixed repayment shall be (i) a five-year loan for no more than four and a quarter percent, (ii) a ten-year loan for no more than five and a half percent or (iii) a fifteen-year loan for no more than six and three quarters percent.
5. Rules and regulations. The corporation is authorized to promulgate rules and regulations necessary for the implementation of the provisions of this section.
§ 2. The sum of one hundred million dollars ($100,000,000), or so much thereof as may be necessary, is hereby appropriated to the department of education out of any moneys in the state treasury in the general fund to the credit of the state purposes account, not otherwise appropriated, and made immediately available, for the purpose of carrying out the provisions of this act. Such moneys shall be payable on the audit and warrant of the comptroller on vouchers certified or approved by the commissioner of education in the manner prescribed by law.
§ 3. This act shall take effect immediately.
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 refinancing undergrad- uate student loans; and making an appropriation therefor
Purpose or general idea of bill
Allows resident with undergraduate federal and private student loans to refinance such loans
Summary of specific provisions
Section 1: Amends the education law by adding a new section 683-c to which establishes the refinance of undergraduate student loans program. Eligible borrowers, who are New York State residents, may apply to have their undergraduate education loans refinanced by the higher education service corporation between $10,000 and $70,000. The repayment terms will be determined based on the credit rating of the borrower the amount being refinanced and whether there is a co-signed to such loan. The borrower may choose either variable repayment or fixed repayment whereby the fixed repayment plan shall be a 5-year loan for no more than 4.25%, a 10-year loan for no more than 5.5% or a 15-year loan for no more than 6.75%.
Section 2: Appropriates $100 million dollars for the purpose of carrying out the provisions of section one of this bill.
Justification
The Office of the State Comptroller estimates that student loan debt in New York State has reached an all-time high of $82 billion. This student loan debt prevents our residents starting families, purchasing homes, and becoming entrepreneurs, which all help spur economic development. The average college graduate in New York State is straddled with approx- imately $32,200 in student loan debt, and the aggregate student loan debt in the state has grown by $43.3 billion in the last 10 years from $38.8 billion in 2006 to $82 billion in 2015.
This heavy financial burden prevents residents from making investments that keep the state economy prosperous. More college graduates are delaying marriage, more are living at home with their parents or renting property instead of pursuing home ownership, and less are able to invest in personal business ventures. Not enough is being done to address the issues associated with those already having accumulated the heavy finan- cial burden. This bill will ease this financial burden for many New Yorkers as it allows for the refinancing of these increasing student loans.
Prior legislative history
S.5181 of 2018 died in Committee in both houses since 2017
Fiscal implications
TBD
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.