BILL NUMBER: S7862

SPONSOR: BAILEY
 
TITLE OF BILL:

An act to amend the state finance law, in relation to excluding certain
sums due from the definition of "debt"

 
PURPOSE OF BILL:

To remove the required twenty-two percent interest plus prejudgment
interest that attaches to student debt when a student has defaulted on
their student loan payments owed to the State University of New York.

 
SUMMARY OF SPECIFIC PROVISIONS:

This bill would amend the definition of "debt" as defined in the state
finance law to exclude tuition, fees, room and board, student loans and
all other related charges from the definition, thus removing the
required twenty-two percent interest and prejudgment interest which must
be collected by the Office of Attorney General when there is default.

              

 
JUSTIFICATION:

Student loan debt is a crisis many Americans are facing across this
nation. The COVID-19 pandemic has only exacerbated this crisis by
increasing the amount of student loan borrowers that have defaulted on
their student loan payments. In New York, the Office of the Attorney
General is responsible for collecting from students who default on money
owed to the State University of New York. Under current Finance Law, the
Office of the Attorney General is required to charge twenty-two percent
interest of the debt owed plus an additional pre-judgment interest when
a student defaults on payment.

These interest costs make it increasingly difficult for student borrow-
ers to ever pay back their student loans. Changing the definition of
"debt" would assist student borrowers because they would not have to
worry about added costs to their tuition debt, making payments more
manageable. A similar exemption exists for medical debt owed to the
state.

 
LEGISLATIVE HISTORY:

New Bill.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None.

 
EFFECTIVE DATE:
This act shall take effect immediately.

                                 
BILL NUMBER: S7862A

SPONSOR: BAILEY
 
TITLE OF BILL:

An act to amend the state finance law, in relation to prohibiting state
agencies from assessing certain additional collection fee charges on
certain outstanding student debts

 
PURPOSE OF BILL:

To remove the required twenty-two percent interest plus prejudgment
interest that attaches to student debt when a student has defaulted on
student loan payments owed to the State University of New York.

 
SUMMARY OF SPECIFIC PROVISIONS:

The prior version of this bill amended the definition of "debt" under
the state finance law to exclude tuition, fees, room and board, student
loans and all other related charges from the definition of debt, thus
removing the required twenty-two percent interest and prejudgment inter-
est that must be collected by the Office of Attorney General when there
              

is a default.

This amended version makes it clear that no state agency shall assess
the additional collection fee charge under this law for the above-men-
tioned liabilities.

It also changes the effective date to coincide with the timeframe of the
New York State budget process.

 
JUSTIFICATION:

Student loan debt is a crisis many Americans are facing across this
nation. The COVID-19 pandemic has only exacerbated this crisis by
increasing the amount of student loan borrowers that have defaulted on
their student loan payments. In New York, the Office of the Attorney
General is responsible for collecting from students who default on money
owed to the State University of New York. Under current law, the Office
of the Attorney General is required to charge twenty-two percent inter-
est of the debt owed, plus an additional pre-judgment interest, when a
student defaults on payment.

These interest costs make it increasingly difficult for student borrow-
ers to pay back their student loans. This bill would help student
borrowers by prohibiting state agencies from assessing the additional
collection fee.

 
LEGISLATIVE HISTORY:

New Bill.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None.

 
EFFECTIVE DATE:
This act shall take effect April 1, 2023.