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A03498 Summary:

BILL NOA03498
 
SAME ASSAME AS S04625
 
SPONSORCrespo
 
COSPNSRSepulveda, Pichardo, Ramos, Rivera, Arroyo, Dilan, Rodriguez, Moya, De La Rosa, Englebright, Blake, Gunther, Williams, Cymbrowitz, McDonald, Simon, Bichotte, Zebrowski, Joyner, Mayer, Lavine, Miller MG, Mosley, Lifton, Thiele, Gjonaj, Cahill, Colton, Simanowitz, Pretlow, Peoples-Stokes, Lupinacci, Lopez, Finch, Curran, Blankenbush, McDonough, Murray, Gottfried, Barnwell
 
MLTSPNSR
 
Add Art 14 Part 6 694-j, Ed L
 
Establishes the New York state higher education debt consolidation and refinancing program.
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A03498 Actions:

BILL NOA03498
 
01/27/2017referred to higher education
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A03498 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A3498
 
SPONSOR: Crespo
  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: Section 1. Entails that Article 14 of the education law is amended by adding Part VI 1-r-which establishes the following: 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 borrowers financial circumstances determining whether the default of payment was due to a change in the borrower's financial circumstances. The corpo- ration 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 ethnic- ity 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). HEDCORP 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 consol- idate loans. But 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 each student is hindering to their future personal financial security as well as negatively impacting 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 payments and default rates. This is due to the fact that the job market has traditionally not been very welcoming to them and this has been worsened by the tough economic times 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 10606 of 2016. Died in Higher Education Committee   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENT: None   EFFECTIVE DATE: Shall take effect on the one hundred twentieth day after it shall become a law.
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A03498 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          3498
 
                               2017-2018 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 27, 2017
                                       ___________
 
        Introduced  by  M.  of  A.  CRESPO,  SEPULVEDA, PICHARDO, RAMOS, RIVERA,
          ARROYO, DILAN, RODRIGUEZ, MOYA, DE LA ROSA -- read once  and  referred
          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  Assem-
        bly, do enact as follows:
 
     1    Section  1. Article 14 of the education law is amended by adding a new
     2  part VI to read as follows:
     3                                   PART VI
     4           NEW YORK STATE HIGHER EDUCATION DEBT CONSOLIDATION AND
     5                             REFINANCING PROGRAM
     6  Section 694-j. New York state higher education  debt  consolidation  and
     7                   refinancing program.
     8    §  694-j. New York state higher education debt consolidation and refi-
     9  nancing program. 1.  The corporation shall have the authority  to  issue
    10  up  to  five  hundred million dollars in bonds, to consolidate and refi-
    11  nance the education loans of eligible  borrowers  at  a  lower  interest
    12  rate,  provided, however if the corporation determines it needs to issue
    13  more than five hundred million dollars in bonds to operate  the  program
    14  effectively,  the  corporation  shall  make the determination by January
    15  fifteen of the year subsequent to when the program goes into effect.
    16    2. The corporation shall consolidate and refinance the education loans
    17  of eligible borrowers and interest shall accrue upon  all  student  loan
    18  payments  made  by  eligible  borrowers to the corporation at a rate per
    19  annum that is equal to or less than 5.5%. Interest shall accrue from the
    20  time the eligible borrower commences repayment under this  section,  and
    21  shall  accrue only during the period over which the eligible borrower is
    22  required to make such repayment.
    23    3. Should an eligible borrower fail to pay to the division any amounts
    24  owed under this section within thirty days of the due date,  the  corpo-
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD08267-01-7

        A. 3498                             2
 
     1  ration  shall  review the eligible borrower's financial circumstances in
     2  order to determine whether the delinquency is a result of  a  change  in
     3  the eligible borrower's financial circumstances. If such a determination
     4  is  made,  the  corporation  may modify the eligible borrower's required
     5  payments. If failure to pay is not determined to be due  to  a  material
     6  deterioration  in  the  eligible borrower's financial circumstances, the
     7  corporation shall terminate and  take  any  legal  action  necessary  to
     8  enforce the terms of the loan.
     9    4.  The  program's operating and administrative costs shall be covered
    10  by the fees charged to apply for the refinancing and the  interest  rate
    11  surcharge.
    12    5. The corporation shall submit an annual report on the program to the
    13  governor  and  the  legislature and the report shall be published on the
    14  corporation's website. The report shall include but not  be  limited  to
    15  the following:
    16    (a) The amount of bonds floated to cover the student debt refinancing;
    17    (b) The number of loans refinanced;
    18    (c) The breakdown of the refinancing rates charged to refinance;
    19    (d) The gender, race and ethnicity of the person refinancing;
    20    (e) The total debt load refinanced by each racial or ethnic group; and
    21    (f)  The  total  administrative  costs  for  operating the refinancing
    22  program and the projected total refinancing costs incurred till debt  is
    23  paid for each racial and ethnic group.
    24    6.  The  corporation is authorized to promulgate rules and regulations
    25  necessary for the implementation of the provisions of this section.
    26    7. Under this section "eligible borrower" and "education  loan"  shall
    27  mean as defined under section six hundred ninety of this article.
    28    § 2. This act shall take effect on the one hundred twentieth day after
    29  it shall have become a law.
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